Company: RWT-PA
Filing Date: 2025-03-03
Form Type: S-3ASR
Source: 0001104659-25-019828
Chunk: 43

Company: REDWOOD TRUST INC
Filing Date: 2025-03-03
Form: S-3ASR
Chunk 43
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 gain net income for the year, and (3) any undistributed taxable income from prior periods.       |

| · | If                                                                                            
 we acquire any asset from a corporation that is or has been a C corporation in a transaction  
 in which our tax basis in the asset is less than the fair market value of the asset, in each  
 case determined as of the date on which we acquired the asset, and we subsequently recognize  
 gain on the disposition of the asset during the five-year period beginning on the date on     
 which we acquired the asset, then we generally will be required to pay regular U.S. federal   
 corporate income tax on this gain to the extent of the excess of (1) the fair market value    
 of the asset over (2) our adjusted tax basis in the asset, in each case determined as of      
 the date on which we acquired the asset. The results described in this paragraph with respect 
 to the recognition of gain assume that the C corporation will refrain from making an election 
 to receive different treatment under applicable Treasury Regulations on its tax return for    
 the year in which we acquire the asset from the C corporation. Under applicable Treasury      
 Regulations, any gain from the sale of property we acquired in an exchange under Section 1031 
 (a like-kind exchange) or Section 1033 (an involuntary conversion) of the Code generally      
 is excluded from the application of this built-in gains tax.                                  |

| · | If                                                                                           
 we elect to treat property that we acquire in connection with a foreclosure of a mortgage    
 loan or from certain leasehold terminations as “foreclosure property,” we may                
 thereby avoid (1) the 100% tax on gain from a resale of that property (if the sale would     
 otherwise constitute a prohibited transaction) and (2) the inclusion of any income from such 
 property not qualifying for purposes of the REIT gross income tests discussed below, but     
 the income from the sale or operation of the property may be subject to regular U.S. federal 
 corporate income tax.                                                                        |

| · | We                                                                                           
 will generally be subject to tax on the portion of any “excess inclusion income”             
 derived from an investment in residual interests in certain mortgage loan securitization     
 structures (i.e., a “taxable mortgage pool” or a residual interest in a real                 
 estate mortgage investment conduit, or a REMIC) to the extent that our capital stock is held 
 by specified types of tax-exempt organizations known as “disqualified organizations”         
 that are