DIGITAL MEDIA

38 Studios may miss out on tax credits

BLOOMBERG FILE PHOTO/SCOTT EELLS
CURT SCHILLING, founder of 38 Studios LLC and a former Boston Red Sox pitcher, speaks during an interview in New York, U.S.
Posted 5/26/12

PROVIDENCE – 38 Studios LLC, the teetering video game company of former Red Sox pitcher Curt Schilling, could be ineligible for million in state tax credits because the firm is incorporated in Delaware, not Rhode Island, according to WPRI-TV CBS 12.

While the company registered its business in Rhode Island in September 2010, it did so as an out-of-state LLC, the news source reported.

The Ocean State’s tax credit law states that only company’s “formed under the laws of the state of Rhode Island” are eligible to receive tax credits.

The company applied for state film tax credits in 2011 and 2012. The 2011 request, which would be worth $2.1 million, is still being reviewed by the state film office, which has not identified any eligibility problems, state officials said.

The 2012 application – for $12 million – was pushed to the back of the line due to the fee-payment default.

Gov. Lincoln D. Chafee said 38 Studios has been trying to sell proceeds of the film tax credit to investors in anticipation of receiving it.

38 Studios, which was lured to Providence with a state $75 million loan guarantee, managed to make an overdue $1.125 million payment to the state on Friday.

The $1.125 million guarantee fee, which is 1.5 percent of the outstanding loan amount, was due May 1.

According to gaming-industry publication Joystiq, 38 Studios employees have not been paid since May 1, and will lose their health insurance Thursday at midnight.

Employees are usually paid on the first and 15th of each month.

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richard@langseth.com

The state needs to go into shutdown mode here. This deal is dead. Too many moving parts to control. Too many LLCs owned in common by the "managers". Too many "managers" (LLC partners) have other deals going.

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