N Registration

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Why does the FAA require N registration airplanes to be registered in the name of a US citizen?
I have heard N reg trusts called a "loophole" to enable foreigners to fly N reg airplanes. Don't be taken in - it is not a loophole at all but a carefully considered option permitted by the FAA. The truth is that the FAA is perfectly happy for its airplanes to be flown by foreigners for proper and legal purposes. However, they want to reserve the right to themselves to deny flight or use of an airplane if national circumstances warrant it. For example, imagine a US airplane being flown for gun running for the benefit of an enemy using those guns against the US. They would want to stop it, wouldn't they? So with a US registered owner, they can. With a foreigner life would be much more difficult.