The U.S. national ensign, sometimes called "50-star" or "Old Glory,"
is the proper and preferred flag for all U.S. vessels. Your boat
should wear it from 0800 until sunset, and when you enter or leave
port during daylight or at night, weather and rig permitting. While in
port, if you leave your boat and will not return before sunset, lower
and stow the national ensign before you go.

The national ensign worn by a vessel must be the flag of her registry-
not necessarily that of the owner or operator.

Generally, the national ensign should be displayed at the peak of the
gaff, i.e., the outer end of the spar extending aft from the mast of
your boat-if you boat has a gaff. If it does not, fly it from the
flagstaff at your boat's stern. If your boat has an overhanging boom
or an outboard motor, your flagstaff may be offset to starboard
(preferably) from your boat's centerline.

On a sportfishing boat, where a stern staff might interfere with the
gear, and vice versa, the practice is to fly the ensign from a halyard
rigged amidships on the after part of the superstructure.

Marconi-rigged sailboats may fly the ensign from the leech of the
aftermost sail (or from the back stay), approximately 2/3 the distance
up its length. This puts it in about the same position it would occupy
if the boat were gaff-rigged.

At anchor or made fast, the ensign should be flown from the stern
staff of all boats. The U.S. national ensign has a 10:19 hoist/fly
ratio.

When you visit foreign water, your boat should display a courtesy flag
(the civil ensign of the country you are visiting) whenever your U.S.
national ensign (the USPS ensign or the yacht ensign should not be
displayed in foreign waters) is displayed. (The USPS ensign and U.S.
yacht ensign should not be worn in foreign waters)

If your vessel is mastless, it should wear this "courtesy flag" at the
bow, in lieu of a squadron or club burgee, or on a starboard antenna
strong enough to support it. It your vessel has one or more masts,
display it single-hoisted at the outboard signal halyard of the main
starboard spreader. Move any flag normally flown there to the inboard
starboard halyard or, if your boat has only one halyard per side, to
the port spreader halyard.

The customs observed in various foreign waters differ from one
another. Try to learn the correct procedure for the country you are
entering. For example, is some countries it is customary to fly the
courtesy flag only after the quarantine flag (the yellow 'Q' flag) and
the vessel has been granted pratique by the appropriate authorities.

Do not fly a foreign courtesy flag after you have returned to U.S.
waters. It is not to be used as a badge of accomplishment for having
cruised to another country.

And on American soil NEVER NEVER fly your flag over the American
flag ...as you may get a K-Bar stuck in you..

http://www.youtube.com/watch?v=UQ6cCPbA8jo

Joe