Once a suitable entity is selected to own the aircraft, proper registration is key to perfecting an owner's interest in the aircraft.
Transaction Highlights
Negotiated the purchase of one of the first Boeing Business Jets and Bombardier Global Express aircraft, and the first operational Eurocopter EC 155B VIP-configured helicopter delivered in the United States.
Represented aircraft owner in connection with the acquisition of Dassault Falcon 900 as part of synthetic lease financing and reverse 1031 exchange involving synthetic lease.
Aircraft Registration
Aircraft can be registered with the U.S. civil aviation registry by U.S. citizens (as defined by the FAA). There exist strict registration requirements, whether an aircraft will be registered individually or in a corporate or LLC entity. For an entity to be considered a U.S. citizen, the President and 2/3 of the board must be U.S. citizens and at least 75% of the voting interests in the company must be held by U.S. citizens.
The FAA has adopted guidelines for the use of non-citizen trusts for the purpose of registering aircraft by non-U.S. citizens, especially when the aircraft are to be operated by the beneficial owner of the trust. Although the FAA continues to approve non-citizen owner trusts, careful consideration should be given by non-U.S. citizens to the method used to register aircraft on the U.S. civil aircraft registry.
When a non-citizen owns a U.S. company, but the company is managed by U.S. citizens, it is possible to use a voting trust under which the interests in the company are subject to a voting trust with a U.S. citizen (typically, a financial institution). In the case of a voting trust, the company itself remains the registered owner of the aircraft and is considered a “U.S. citizen” by the FAA by virtue of the voting trust.
The FAA requires the re-registration of U.S. registered aircraft every 3 years.
Registered owners will be provided with 180 days notice to effect the re-registration of their aircraft. Failure to properly re-register the aircraft will result in the termination of the registration which will, in most cases, also result in a default under related financing arrangements.
AVIATION RESOURCES
KEEPING YOU ON COURSE
We are experienced in working with tax, legal and financial advisors of companies of all sizes in addition to family offices, to implement appropriate operating structures and planning objectives. For first time business aircraft buyers, we can quickly assemble a team of experienced industry professionals and others to assist the client with business, technical and other aspects of an aircraft purchase and ongoing aircraft management under Parts 91 and/or 135 of the Federal Aviation Regulations.
One of the challenges of using aircraft in business is understanding the effect of personal use on an executive and the company, and strategies for addressing income tax issues.
Personal Use
Letters of intent are an important start to most aircraft transactions, and failing to give them the proper attention can create costly misunderstandings.
Letters of Intent
Understanding the aircraft acquisition process is important in order to avoid common pitfalls and costly mistakes.
Aircraft Acquisition Process
In order to register an aircraft with the FAA, an individual or company must meet specific requirements. There are methods available for non-U.S. citizens to register aircraft with the FAA.
Aircraft Registration
Public Companies have unique concerns when purchasing corporate aircraft and structuring their operations, including from the perspective of SEC disclosure of non-business use, security and confidentiality.
Public Companies
Acquiring an aircraft currently registered outside the United States takes careful planning and requires answering some fundamental threshold questions. Exporting aircraft may not require the payment of duty, but failure to make appropriate customs entries can be costly.
Import / Export
Planning opportunities exist that can defer or even eliminate the imposition of sales and use taxes in almost every state.
Sales and Use Tax
In addition to aviation counsel, a successful transaction requires having experienced aviation professionals and tax advisors.
The Right Team
Our attorneys are experienced with helping clients navigate the often counter-intuitive rules of the FAA and other regulatory authorities.
The Dilemma of Single Purpose Entities
When acquiring an aircraft, several financing alternatives are available. Which is right for you?
Financing Options
THE RIGHT TEAM. THE RIGHT DEAL.
If an aircraft purchase agreement is signed, and a business aviation transaction goes smoothly at the end, with relevant registration, state tax, federal tax, DOT, FAA and other issues addressed, it is only because a great deal of work has been done, and experience brought to bear, to plan for it.
- Stewart Lapayowker