Woody Allen performed this joke in his early 1960s standup act, and it was printed in Parade magazine on December 21, 1963:
   
“I have a lovely gold watch—a family heirloom. My grandfather, on his deathbed, sold it to me.”
   
The joke is that we are expecting “gave it to me,” but the grandfather, on his deathbed (when money was of no importance to him), sold it to Woody Allen. The very popular joke highlights the emphasis on money in Jewish humor.
 
 
Newspapers.com
21 December 1963, The Morning Call (Allentown, PA),“My Favorite Jokes” by Woody Allen, Parade magazine, pg. 15, col. 2:
I have a lovely gold watch—a family heirloom. My grandfather, on his deathbed, sold it to me.
     
Wikiquote
Woody Allen (born ,i>Allen Stewart Königsberg on December 1, 1935) is an American film director, writer, actor, comedian and musician.
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Standup Comic (1999)
A CD compilation of Allen comedy routines from 1964-1968
It is a gorgeous gold pocket watch, however, I’m proud of it. My grandfather, on his deathbed, sold me this watch.
     
YouTube
Woody Allen- Stand up comic: My Grandfather
wo00ody
Dec 5, 2009
 
The Threepenny Review (Fall 2015)
On Jokes
James Lasdun
I don’t have the type of mind to which jokes naturally adhere. The only one that has stuck in my adult life is the Woody Allen line This is my grandfather’s watch; he sold it to me on his deathbed, and it turns out I don’t even have the wording right. The way he actually says it is: I’m very proud of this gold pocket watch. My grandfather, on his deathbed, sold me this watch.
     
Twitter
Millionaire Mentor
@DavidIHarrison
The greatest one-liner of all time?
My grandfather, on his deathbed, sold me this watch.
#WoodyAllen
https://youtube.com/watch?v=J2ZvK8AMchM
4:55 AM · Sep 16, 2020
 
Twitter
Steve Keating
@LeadToday
“I’m very proud of my gold pocket watch. My grandfather, on his deathbed, sold me this watch.” - Woody Allen
10:42 AM · Jan 4, 2022
 
Twitter
Dan Rapp
@danrapp
Replying to @DudespostingWs
Woody Allen had a joke in his standup. He pulls out a pocket watch. “I’m very proud of my gold pocket watch. My grandfather, on his deathbed, sold me this watch.”
4:13 PM · Dec 28, 2022