Company: RWT-PA
Filing Date: 2025-01-15
Form Type: 424B5
Source: 0001104659-25-003632
Chunk: 120

Company: REDWOOD TRUST INC
Filing Date: 2025-01-15
Form: 424B5
Chunk 120
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 account. Because the determination as to whether any of the alternative
tests of Section 302(b) of the Code will be satisfied with respect to the U.S. Holder depends upon the facts and circumstances
at the time that the determination must be made, U.S. Holders are advised to consult their tax advisors to determine such tax treatment.

If a redemption or repurchase
of shares of our capital stock is treated as a distribution, the amount of the distribution will be measured by the amount of cash and
the fair market value of any property received. See “Material U.S. Federal Income Tax Considerations—Federal Income Tax Considerations
for Holders of Our Capital Stock and Debt Securities—Taxation of Taxable U.S. Holders of Our Capital Stock—Distributions
Generally.” A U.S. Holder’s adjusted tax basis in the redeemed or repurchased shares generally will be transferred to the
holder’s remaining shares of our capital stock, if any. If a U.S. Holder owns no other shares of our capital stock, under certain
circumstances, such basis may be transferred to a related person or it may be lost entirely. Prospective investors should consult their
tax advisors regarding the U.S. federal income tax consequences of a redemption or repurchase of our capital stock.

If a redemption or repurchase
of shares of our capital stock is not treated as a distribution, it will be treated as a taxable sale or exchange in the manner described
under “Material U.S. Federal Income Tax Considerations—Federal Income Tax Considerations for Holders of Our Capital Stock
and Debt Securities—Taxation of Taxable U.S. Holders of Our Capital Stock—Dispositions of Our Capital Stock.”

Tax Rates

The maximum tax rate for
non-corporate taxpayers for (1) long-term capital gains, including certain “capital gain dividends,” is generally 20%
(although depending on the characteristics of the assets which produced these gains and on designations which we may make, certain capital
gain dividends may be taxed at a 25% rate) and (2) “qualified dividend income” is generally 20%. In general, dividends
payable by REITs are not eligible for the reduced tax rate on qualified dividend income, except to the extent that certain holding period
requirements have been met and the REIT’s dividends are attributable to dividends received from taxable corporations (such as its
TRSs) or to income that was subject to tax at the corporate/REIT level (for example