1. Subparagraph (2), “The applicant is not the owner.”
2. Subparagraph (3), “The applicant is not qualified to submit an application under this part.”
3. Subparagraph (4), “The interest of the applicant was created by a transaction that was not entered into in good faith, but rather was made to avoid (with or without the owner’s knowledge) compliance with section 501 of the Federal Aviation Act of 1958 (49 U.S.C. 1401).

United States Law (USC) requires that any aircraft registered with the FAA, which operates outside of the USA for more than 40% of its flying hours during any six calendar month period, be “legally owned” by a “Citizen of the United States”.

Under the definitions of the law, the below listed entities or individuals qualify to own and operate an aircraft permanently outside of the United States:

1. A “Trust” with one or more Trustees, of which all Trustees must be U.S. Citizens or,
2. A “Corporation” organized under the law of one of the states of the United States, where the “president” is a U.S. Citizen, where “two-thirds or more” of the “board of directors” or any other “managing officers” are U.S. Citizens, and where a minimum of “75 percent of the voting interest” is owned or controlled by persons who are U.S. Citizens.
3. A “Limited Liability Company” organized under the law of one of the states of the United States, where the “president” is a U.S. Citizen, and where “two-thirds or more of the appointed officers” and the “designated managers” are U.S. Citizens, and where a minimum of “75 percent of the membership voting interest” is owned or controlled by persons who are U.S. Citizens.
4. A “Partnership”, where “each partner is a citizen of the United States” or
5. A “Person” who is an actual U.S. Citizen.

NOTE: AGC believes it is important for you to understand that a Non-US Citizen has “No legal economic ownership tax or financial rights, and very limited legal controlling management or stockholder rights under any FAA registration arrangement which utilizes as the legal aircraft title holder:

1. a corporation,
2. a limited-liability company,
3. a partnership or,
4. a individual citizen.”

NOTE: AGC also believes it is very important for you to understand that for any of the four foregoing to qualify to submit an application of aircraft registration under Part 47, paragraph 47.5 (b), that the individual or entity must have “physically purchased the aircraft” under the “prevailing contract laws” of one of the states of the United States and that legal title in the United States is a function of U.S. state law and not federal U.S. law.

Whenever performing any FAA aircraft registration transaction, especially for those cases involving a Non U.S. Citizen, the use a “Non revocable Bare Grantor Trust” is normally the best solution unless the client’s legal and tax situation, host country law, or financial institution requires otherwise. The two types of trusts normally provisioned by AGC are:

1. A United States Business Trust. This Trust requires a U.S. Federal Employee Tax Identification Number (EIN) and must file U.S. income tax returns on its profit/loss activity either as a Trust or as a corporation.
2. A Non-United States Bare Trust. This Trust requires no U.S. Federal EIN number and has no U.S. tax reporting liability as long as it does not transact monetary business. This Trust can conduct business and have a U.S. EIN number, but can only file as a Trust.

DID YOU KNOW the FAA does not verify the “legal compliance status or legal sufficiency” of any Trust Document under any specific country’s law or any U.S. state’s law when reviewing the document for compliance with the FAR 47?