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employment and had executed a comprehensive, general
release of all claims against the employer. See Morabito
v. Commissioner, supra; Taggi v. United States, supra at
745. In each case, the court rejected the taxpayer’s
attempt to exclude all or a portion of the payment from
income under section 104(a)(2). Neither taxpayer had made
a claim against the employer before accepting the payment,
and both courts held that, accordingly, there was no
settlement of a specific claim but merely a waiver of
general rights. See Morabito v. Commissioner, supra;
Taggi v. United States, supra at 746. Both courts further
held that the lack of any allocation of the payment to
damages excludable under section 104(a)(2) required the
entire amount to be included in income. See Morabito v.
Commissioner, supra; Taggi v. United States, supra at 746.
In Morabito we stated the legal principle as follows:
Where a settlement agreement contains a number
of claims, does not allocate the portion
excludable under section 104(a)(2), and there
is no other evidence that a specific claim was
meant to be singled out, the court must consider
the entire amount taxable. * * *
The instant case is much different. Petitioner had
made a formal claim against State Farm for damages
incurred in an automobile accident, and State Farm paid
an amount limited to the motorist/underinsured motorist
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