The American Paradise: Using a Tax Free U.S. Virgin Islands Exempt Company for FAA Registrating of Foreign-Owned Aircraft - Law Firm Solomon Blum Heymann LLP Attorneys New York, New York THE AMERICAN PARADISE: USING A TAX-FREE U.S. VIRGIN ISLANDS EXEMPT COMPANY FOR FAA REGISTRATION OF FOREIGN-OWNED AIRCRAFT By William L. Blum and Marjorie Rawls Roberts Practitioners often focus on the voting trust when they create an ownership structure for a foreign client who is seeking Federal Aviation Administration ("FAA") registration of an aircraft. When the stock of a corporation formed in the United States is held by a voting trustee who is a U.S. citizen, the foreign owner of the corporation can be transformed into a "United States citizen" for purposes of FAA registration. This focus on the voting trust, and the requirement that the president and two-thirds of the board of directors and other managing officers of the corporation be U.S. citizens, is understandable because it leads to eligibility for the prized FAA "N" number. The Federal Aviation Act of 1958, as amended, and its corresponding regulations devote several sections to the citizenship requirement and the voting trust. However, requirements for the place of incorporation of owner receive scant attention in the law's definitions. In brief, the corporation need only be "organized under the laws of the United States or of any State, Territory or possession of the United States." To Tax or Not To Tax? A Delaware corporation often is selected as the entity to own the aircraft. Delaware is often the jurisdiction of choice for this purpose for the same reason that it is used by many of the country's largest corporations as well as hundreds of thousands of smaller ones: Delaware provides maximum corporate flexibility at minimum cost. Other states, too, can provide similar benefits. A corporation formed in any of the "states," however, except for one, will be subject to federal income tax at the u