It is petitioner's primary contention that the second sentence of section 543(a)(6) means that if a corporation receives, from other than its shareholders, as little as 10 percent plus $ 1 of its ordinary gross income as mineral royalties, then all of the amounts received from its shareholders constitute personal holding company income. Here, however, except in 1972, Rio Gravel had no income, other than the payments received from its shareholder, Jamieson Co. Thus, because there was no income, other than from shareholders, the 10-percent test in the second sentence of section 543(a)(6) was not met, petitioner argues, and accordingly Rio Gravel did not have1985 U.S. Tax Ct. LEXIS 15">*30 any personal holding company income. In so arguing, petitioner assumes, as it must, that the payments by Jamieson Co. to Rio Gravel, were otherwise classifiable under the first sentence of section 543(a)(6).

Respondent contends that the payments in issue should not be excluded under section 543(a)(6). He contends that the payments should have been classified under section 543(a)(3) as mineral royalties, and as such, the requisite amount of 85 T.C. 839">*846 personal holding company income was present for purposes of section 542(a)(1).

The resolution of this controversy thus requires us to determine the breadth of the phrase "compensation (however designated and from whomsoever received) for the use of, or the right to use, property of the corporation" as it is employed in the first sentence of section 543(a)(6). ⁴

1985 U.S. Tax Ct. LEXIS 15">*31 In the interpretation and construction of statutes, it is our duty to ascertain and give effect to the intent of Congress from the language of the statute. If such language is susceptible of more than one meaning, resort may be had to the legislative history of the statute to determine the congressional intent. Huntsberry v. Commissioner, 83 T.C. 742">83 T.C. 742, 83 T.C. 742">747-748 (1984); Abbott v. Commissioner, 258 F.2d 537">258 F.2d 537, 258 F.2d 537">543 (3d Cir. 1958), affg. 28 T.C. 795">28 T.C. 795 (1957); Medical-Surgical Group, Inc. v. Commissioner, 33 T.C. 888">33 T.C. 888, 33 T.C. 888">893 (1960).

We do not think that the language of section 543(a)(6), itself, clearly indicates what Congress intended to include within the scope of the phrase "compensation (however designated and from whomsoever received) for the use of, or the right to use property of the corporation." Respondent claims that the words as used in this context must be narrowly construed to mean "rent." Petitioner apparently argues that the words were intended to encompass all payments made by a shareholder to a corporation.

A review of the legislative history of section 543(a)(6)1985 U.S. Tax Ct. LEXIS 15">*32 convinces us that Congress intended the phrase to apply only to "rents."

Provisions corresponding to section 543(a)(6) were first enacted in the Revenue Act of 1937. The purpose of this legislation was to close what had developed as a major defect in the personal holding company provisions, namely the failure to include certain rent as personal holding company income. This is made clear in the House report on this measure, wherein it was stated:

Since under existing law, this type of compensation is not now included for the purpose of determining whether the corporation meets the 80 percent test, the taxpayer may fix such compensation in an amount sufficient to 85 T.C. 839">*847 bring its other investment income below the 80-percent test. It has been shown to the committee that this device has been employed by taxpayers who had incorporated their yachts, city residences, or country houses and had paid sufficient rent to give the corporations enough income from their service to take them out of present section 351. By including this type of income in the definition of personal holding company income, your committee removes this method of tax avoidance. [H. Rept. 1546, 75th Cong., 1985 U.S. Tax Ct. LEXIS 15">*33 1st Sess. 6 (1937), 1939-1 C.B. (Part 2) 707-708 (emphasis added). See also S. Rept. 1242, 75th Cong., 1st Sess. (1937), 1937-2 C.B. 609, 613; H. Doc. 337, 75th Cong., 1st Sess. 6 (1937).]

It is apparent that section 543(a)(6) was directed at the use of "rents" as a means of avoiding personal holding company status in order to build a tax shelter for other types of income within the definition of personal holding company income.

Problems developed when corporations renting property to their shareholders were caught within the web of the personal holding company tax, regardless of the bona fides of the transactions involved and the absence of an intent to avoid taxes. See, e.g., Randolph Products Co. v. Manning, 176 F.2d 190">176 F.2d 190 (3d Cir. 1949). Thus, as part of the Revenue Act of 1950, section 543(a)(6) was amended to exempt from said section rents "received for the use by the lessee, in the operation of a bona fide commercial, industrial, or mining enterprise of property of the taxpayer." Again, the focus by the legislature was on "rents," which is supported by the following language contained in S. 1985 U.S. Tax Ct. LEXIS 15">*34 Rept. 2375, 81st Cong., 2d Sess. (1950), 1950-2 C.B. 557:

section 502(f) [the predecessor to section 543(a)(6)] of the Code shall not apply with respect to rents received during the taxable years ending after December 31, 1945, and prior to January 1, 1950 if such rents were received for the use by the lessee in the operation of a bona fide commercial, industrial, or mining enterprise, of property of the taxpayer. [Emphasis added. See also S. Rept. 2375, 42 B.T.A. 529">supra at 530.]

In 1955, Congress, in Public Law 370, extended the application of section 543(a)(6) to cover the years 1950 to 1954. The House Ways and Means Committee reiterated that the 1950 amendment was "designed to take care of hardship cases which frequently arise where a corporation rents property to its principal stockholders." H. Rept. 1353, 84th Cong., 1st Sess. (1955), 1955-2 C.B. 845. (Emphasis added.)

85 T.C. 839">*848 From the above-quoted committee reports, it seems clear that in enacting section 543(a)(6)Congress was primarily concerned with payments by shareholders for the rental of corporate property. This interpretation is reinforced by the following1985 U.S. Tax Ct. LEXIS 15">*35 language in the Senate Finance Committee report on the Internal Revenue Code of 1954:

Subsection (a)(6), relating to the inclusion in personal holding company income of rental income received from corporate shareholders, is qualified to limit application of the paragraph to cases in which the corporation has other personal holding company income in excess of 10 percent of its gross income. * * * [S. Rept. 1622, 83d Cong., 2d Sess. 319 (1954) (emphasis added). See also S. Rept. 1622, 42 B.T.A. 69">supra at 74; H. Rept. 1337, 83d Cong., 2d Sess. 56 (1954).]

We find additional support for this proposition in Montgomery Coca-Cola Bottling Co. v. United States, 206 Ct. Cl. 864">206 Ct. Cl. 864, 206 Ct. Cl. 864">865 (1975), ⁵ where in a summary judgment proceeding the Court of Claims indicated:

The legislative background of section 543(a)(6) and its predecessor sections show that the phrase "compensation * * * for the use of, or the right to use" as it is employed in the first sentence of section 543(a)(6) was only intended to apply to amounts received by the corporation as rental income. The first sentence of section 543(a)(6) does not include royalty income, and there is no indication 1985 U.S. Tax Ct. LEXIS 15">*36 that Congress intended royalties to be treated as rents in this instance. [Emphasis in original. Citations omitted.]

1985 U.S. Tax Ct. LEXIS 15">*37 It is therefore apparent that "compensation (however designated and from whomsoever received) for the use of, or the right to use property of the corporation" refers exclusively to "rents." Thus, for petitioner to prevail on this issue, it must show that the payments in question constituted rent. If, however, as respondent contends, the payments constituted royalties, then we must decide this issue in favor of respondent.

85 T.C. 839">*849 The Code, the regulations, and the legislative history do not clearly delineate the difference between rents and royalties. See Johnson Investment & Rental Co. v. Commissioner, 70 T.C. 895">70 T.C. 895, 70 T.C. 895">900 (1978). We must therefore look to the courts which have passed on this issue for guidance. ⁶ In Logan Coal & Timber Association v. Commissioner, 122 F.2d 848">122 F.2d 848, 122 F.2d 848">850 (3d Cir. 1941), affg. 42 B.T.A. 529">42 B.T.A. 529 (1940), the Third Circuit said that the difference between rents and royalties for purposes of the personal holding company provisions is:

the commonly accepted one that rent is a compensation for the right to use property which is fixed and certain in amount and payable periodically1985 U.S. Tax Ct. LEXIS 15">*38 over a fixed period regardless of the extent of the use of the property, while royalty is a compensation for the use of property which is based as to amount entirely upon the use actually made of the property. * * * [Fn. refs. omitted.]

The courts have adhered to this same basic distinction between rents and royalties on numerous occasions. 70 T.C. 895">Johnson Investment & Rental Co. v. Commissioner, supra at 901; Warren Browne, Inc. v. Commissioner, 14 T.C. 1056">14 T.C. 1056, 14 T.C. 1056">1063 (1950); U.S. Universal Joints Co. v. Commissioner, 46 B.T.A. 111">46 B.T.A. 111, 46 B.T.A. 111">115-116 (1942); Kiesau Petroleum Corp. v. Commissioner, 42 B.T.A. 69">42 B.T.A. 69, 42 B.T.A. 69">75-77 (1940); see also Anderson v. Helvering, 310 U.S. 404">310 U.S. 404, 310 U.S. 404">409 (1940); Bayou Verret Land Co. v. Commissioner, 450 F.2d 850">450 F.2d 850, 450 F.2d 850">853-855 (5th Cir. 1971), affg. on this issue 52 T.C. 971">52 T.C. 971 (1969); Campbell v. Great National Life Insurance Co., 219 F.2d 693">219 F.2d 693, 219 F.2d 693">695-696 (5th Cir. 1955).

1985 U.S. Tax Ct. LEXIS 15">*39 When we apply the above standard to the payments from Jamieson Co. to Rio Gravel, there can be no doubt that such payments were royalties. Although the parties adopted the language of an outright sale in one portion of their agreement, this was merely a preliminary statement which was contradicted by other provisions therein. The heart of their arrangement was contained in the terms of paragraph 3, where they provided that Jamieson Co. was to pay Rio Gravel a specified amount for each ton of rock, sand, or gravel removed. This was 85 T.C. 839">*850 the only consideration for the sand and gravel. The payments were not fixed and certain in amount, but rather, such payments were tied directly to the amount of rock, sand, or gravel that was quarried. As the quantity of rock extracted by Rio Gravel increased, so did the payments by Jamieson Co. It is also noteworthy that petitioner characterized the payments as royalties in the returns in issue.

It is true that Jamieson Co. acquired the right to possession of the land owned by Rio Gravel, but those possessory rights were merely incidental to the quarrying of the stone. See Johnson Investment & Rental Co. v. Commissioner, 70 T.C. 895">70 T.C. 902;1985 U.S. Tax Ct. LEXIS 15">*40 Logan Coal & Timber Association v. Commissioner, 42 B.T.A. at 537. The critical distinction is that Jamieson Co. paid a fee which varied with the quantity of minerals removed.

We find additional support in Pleasanton Gravel Co. v. Commissioner, 64 T.C. 510">64 T.C. 510 (1975), affd. per curiam 578 F.2d 827">578 F.2d 827 (9th Cir. 1978), cert. denied 439 U.S. 1071">439 U.S. 1071 (1979), where we held that an almost identical agreement between petitioner and Jamieson Co. consituted a contract for royalty payments rather than a contract for the sale of its interest in the property involved.

For the above-stated reasons, we feel that the payments from Jamieson Co. to Rio Gravel constituted royalties rather than payments for rent, and thus were not properly classifiable under the first sentence of section 543(a)(6). ⁷

1985 U.S. Tax Ct. LEXIS 15">*41 Petitioner alternatively argues that even if the payments were not properly classifiable under section 543(a)(6), they were properly classifiable under section 543(a)(2), the provision for rents. As we have indicated supra, the payments constituted royalties, not rents, and as such, because the payments were for rock, sand, or gravel, they were properly classifiable under section 543(a)(3), the provision for mineral royalties. Petitioner, however, contends that section 543(b)(3), the definitional section for adjusted income from rents, requires us to reach a different result. Section 543(b)(3) provides:

(3) Adjusted income from rents. -- The term "adjusted income from rents" means the gross income from rents, reduced by the amount subtracted under paragraph (2)(A) of this subsection. For purposes of the 85 T.C. 839">*851 preceding sentence, the term "rents" means compensation, however designated, for the use of, or right to use, property, and the interest on debts owed to the corporation, to the extent such debts represent the price for which real property held primarily for sale to customers in the ordinary course of its trade or business was sold or exchanged by the corporation; 1985 U.S. Tax Ct. LEXIS 15">*42 but such term does not include --

(A) amounts constituting personal holding company income under subsection (a)(6),

(B) copyright royalties (as defined in subsection (a)(4)),

(C) produced film rents (as defined in subsection (a)(5)(B)), or

(D) compensation, however designated, for the use of, or the right to use, any tangible personal property manufactured or produced by the taxpayer, if during the taxable year the taxpayer is engaged in substantial manufacturing or production of tangible personal property of the same type.

Petitioner submits that because section 543(b)(3) does not contain a specific exclusion for mineral royalties (as it does, for example, for copyright royalties) that Congress intended to include mineral royalties within the definition of rents in section 543(b)(3). We disagree. Congress specifically provided a definitional provision for adjusted income from mineral royalties in section 543(b)(4). If we were to interpret section 543(b)(3) so as to include mineral royalties within the definition of rent, then section 543(b)(4) would be unnecessary, a result Congress clearly did not intend. It is a well-accepted rule of statutory construction that the various1985 U.S. Tax Ct. LEXIS 15">*43 sections of the Code should be construed so that one section will explain and support and not defeat or destroy another section. Crane v. Commissioner, 331 U.S. 1">331 U.S. 1, 331 U.S. 1">13 (1947); Bernier v. Bernier, 147 U.S. 242">147 U.S. 242, 147 U.S. 242">246 (1893); Brons Hotels, Inc. v. Commissioner, 34 B.T.A. 376">34 B.T.A. 376, 34 B.T.A. 376">381 (1936).

In sum, we hold that payments in issue were mineral royalties, and thus properly classifiable under section 543(a)(3). The parties are in agreement that if the payments are classified under section 543(a)(3) then the requisite amount of personal holding company income was present. Respondent properly characterized Rio Gravel as a personal holding company.

The second issue for decision is whether respondent is barred from the assessment and collection of the deficiencies herein, due to the expiration of the applicable period of limitation, as pleaded by petitioner.

Section 6501(f) provides that if a corporation which is a personal holding company fails to file with its return a 85 T.C. 839">*852 schedule setting forth the items of gross income and adjusted ordinary gross income, and the names and addresses of its stockholders1985 U.S. Tax Ct. LEXIS 15">*44 owning more than 50 percent of the outstanding stock, then respondent has 6 years after the taxpayer's return is filed within which to commence statutory proceedings for assessment and collection of tax by the mailing of a deficiency notice. We have already determined that Rio Grande is a personal holding company; therefore, because Rio Grande failed to attach a schedule enumerating the items of gross income and adjusted ordinary gross income, the 6-year statute is applicable. ⁸

1985 U.S. Tax Ct. LEXIS 15">*45 Rio Gravel's income tax returns for the fiscal years ending July 31, 1968, through June 30, 1972, were timely filed with respondent; consequently, the 6-year statute of limitations under section 6501(f) for these years would have expired, respectively, on October 15, 1974, October 15, 1975, October 15, 1976, October 15, 1977, and September 15, 1978.

Section 6501(c)(4) allows the prescribed statute of limitations to be extended by agreement between the parties, so long as such consent is executed while the statute of limitations is still open. In the absence of valid consents, however, the period of limitation on assessment and collection against Rio Gravel would have expired on September 15, 1978. The notice of deficiency mailed on June 4, 1981, would thus be untimely.

Here, numerous consecutive consents were executed for the returns in issue, extending the period of assessment and collection for those years, until, ultimately, June 30, 1981. As shown in our findings, each was executed while the statute of limitations was still open. Accordingly, the resolution of the 85 T.C. 839">*853 issue involved herein turns on whether the consents extending the statute of limitations were validly1985 U.S. Tax Ct. LEXIS 15">*46 executed.

Petitioner initially contends that no one had the authority to act on behalf of Rio Gravel in executing the waivers, since Rio Gravel had ceased to exist after it merged into petitioner. Respondent, on the other hand, contends that the consents were validly executed by petitioner as successor in interest to Rio Gravel.

The parties are in agreement that the validity of the consents (at least with respect to petitioner's capacity to execute) is to be determined under the laws of the State of California, where they were executed. See Lesser v. Commissioner, 47 T.C. 564">47 T.C. 564, 47 T.C. 564">591 (1967); see also United States v. Krueger, 121 F.2d 842">121 F.2d 842 (3d Cir. 1941); Sanderling, Inc. v. Commissioner, 66 T.C. 743">66 T.C. 743, 66 T.C. 743">750 (1976), affd. on this issue 571 F.2d 174">571 F.2d 174 (3d Cir. 1978).

The provisions of the California Corporation Code (West 1977) pertinent to this case are set forth in the footnote below. ⁹ Under these provisions, the separate existence of Rio Gravel ceased when all of the requisite formalities of the merger had been completed, at which time petitioner, as the surviving1985 U.S. Tax Ct. LEXIS 15">*47 corporation, took all of the rights and assumed all of the obligations of Rio Gravel as its own. The agreement of merger herein contained similar language.

It has been held that taxes are debts or liabilities. See United States v. Scott, 167 F.2d 301">167 F.2d 301 (8th Cir. 1948). It follows that petitioner, who became primarily liable for the tax liabilities of Rio Gravel after the merger under California law, had the power under State law to extend the period of limitation for its own direct liability, just as its predecessor, 1985 U.S. Tax Ct. LEXIS 15">*48 Rio Gravel, would have had. See and compare Union Bleachery v. Commissioner, 97 F.2d 226, 228 (4th Cir. 1938), affg. a Memorandum Opinion of this Court; Phillips v. Lyman H. Howe Films Co., 33 F.2d 891">33 F.2d 891 (3d Cir. 1929); Popular Library, Inc. v. Commissioner, 39 T.C. 1092">39 T.C. 1092 (1963).

85 T.C. 839">*854 Petitioner argues that the Form 872 purporting to extend the statute of limitations to December 31, 1978, was not valid because the corporation's name did not appear next to the signature of G.W. Jamieson. The last paragraph of the instructions on the Form 872 in issue instructs "If the taxpayer is a corporation, this consent must be signed with the corporate name followed by the signature and title of the officer(s) authorized to sign." Here, the form was addressed to "Pleasanton Gravel Co., Successor in Interest to Rio Gravel, Inc." and was signed "G.W. Jamieson Pres," thus it was unnecessary for the corporate name to appear again beside Mr. Jamieson's signature. Moreover, the other four consents all listed the corporation's name next to his signature. We therefore agree with respondent that this mere1985 U.S. Tax Ct. LEXIS 15">*49 clerical error does not invalidate an otherwise proper waiver. See Lefebvre v. Commissioner, T.C. Memo. 1984-202, affd. per curiam 758 F.2d 1340 (9th Cir. 1985); Illinois Addressograph Manufacturing Co. v. Commissioner, 31 B.T.A. 498">31 B.T.A. 498 (1934); Rauh v. Commissioner, 22 B.T.A. 662">22 B.T.A. 662 (1931). See also William S. Dorg, Inc. v. Commissioner, 13 B.T.A. 256">13 B.T.A. 256 (1928) (waiver signed by corporate officer was binding despite absence of corporate seal).

It is urged by petitioner that pursuant to Lesser v. Commissioner, 47 T.C. 564">47 T.C. 591, the burden of proof is on respondent to show that G.W. Jamieson was authorized to sign the consent. We agree that when respondent relies on the exception to the running of the period of limitation provided by section 6501(c)(4), he bears the burden of showing the necessary waivers. However, waivers valid on their face and introduced into evidence by respondent shift the burden of going forward with the evidence back to petitioner, upon whom the burden of proof on the statute of limitations1985 U.S. Tax Ct. LEXIS 15">*50 issue lies, to show invalid execution. Concrete Engineering Co. v. Commissioner, 19 B.T.A. 212">19 B.T.A. 212 (1930), affd. 58 F.2d 566">58 F.2d 566 (8th Cir. 1932); Stern Bros. & Co. v. Burnet, 51 F.2d 1042">51 F.2d 1042 (8th Cir. 1931), affg. 17 B.T.A. 848">17 B.T.A. 848 (1929); Adler v. Commissioner, 85 T.C. 535">85 T.C. 535 (1985); Lefebvre v. Commissioner, supra.¹⁰

Here the consents appear to be regular on their face, in accordance with the law, and signed by Mr. Jamieson as president of petitioner. Petitioner has not offered any evidence 85 T.C. 839">*855 as to lack of his authority, and has accordingly failed to carry its burden on the question of proper execution. See National Water Main Cleaning Co. v. Commissioner, 16 B.T.A. 223">16 B.T.A. 223 (1929).1985 U.S. Tax Ct. LEXIS 15">*51

Petitioner alternatively argues that the consents were invalid because they were not intended to apply to deficiencies in the personal holding company tax. Petitioner apparently contends that each waiver is for the assessment of income taxes, and therefore should not have been used here because the personal holding company tax is not an income tax, but rather, a penalty tax imposed on corporations for shielding passive income. With this we cannot agree. The personal holding company tax is imposed by section 542, which is located in subtitle A entitled "Income Taxes." Penalties and additions to tax, however, are found in subtitle F entitled "Procedure and Administration." Nonetheless, even if petitioner's contention is correct, in Picard v. Commissioner, 28 T.C. 955">28 T.C. 955, 28 T.C. 955">961 (1957), we indicated that the word "tax" in such waivers included any applicable interest, penalty, or other additions to tax. See also Marbut v. Commissioner, 28 T.C. 687">28 T.C. 687 (1957). We think that the waivers in the instant matter embraced the personal holding company tax. See Commercial Finance Co. v. Commissioner, T.C. Memo. 1968-229.1985 U.S. Tax Ct. LEXIS 15">*52

We accordingly hold that respondent is not time-barred from assessing and collecting the personal holding company tax owed by petitioner.

Decision will be entered for the respondent.