Company: RWT-PA
Filing Date: 2025-01-16
Form Type: 424B5
Source: 0001104659-25-004099
Chunk: 119

Company: REDWOOD TRUST INC
Filing Date: 2025-01-16
Form: 424B5
Chunk 119
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 made available to holders of all classes of our capital
stock for the year. In addition, except as otherwise required by law, we will make a similar allocation with respect to any undistributed
long-term capital gains which are to be included in the long-term capital gains of our stockholders, based on the allocation of the capital
gain amount which would have resulted if those undistributed long-term capital gains had been distributed as “capital gain dividends”
by us to our stockholders.

Retention of Net Capital Gains

We may elect to retain, rather
than distribute as a capital gain dividend, all or a portion of our net capital gains. If we make this election, we would pay tax on
our retained net capital gains. In addition, to the extent we so elect, our earnings and profits (determined for U.S. federal income
tax purposes) would be adjusted accordingly, and a U.S. Holder generally would:

| · | include its                                                                                                                           
 pro rata share of our undistributed capital gain in computing its long-term capital gains in its U.S. federal income tax return for   
 its taxable year in which the last day of our taxable year falls, subject to certain limitations as to the amount that is includable; |

| · | be deemed to                                                                                                                 
 have paid its share of the capital gains tax imposed on us on the designated amounts included in the U.S. Holder’s income as 
 long-term capital gain;                                                                                                      |

| · | receive a credit                                   
 or refund for the amount of tax deemed paid by it; |

| · | increase the                                                                                                                     
 adjusted tax basis of our capital stock by the difference between the amount of includable gains and the tax deemed to have been 
 paid by it; and                                                                                                                  |

| · | in the case                                                                                                                        
 of a U.S. Holder that is a corporation, appropriately adjust its earnings and profits for the retained capital gains in accordance 
 with Treasury Regulations to be promulgated by the IRS.                                                                            |

Passive Activity Losses and Investment Interest Limitations

Distributions we make and
gain arising from the sale or exchange by a U.S. Holder of our capital stock will not be treated as passive activity income. As a result,
U.S. Holders generally will not be able to apply any “passive losses” against this income or gain. A U.S. Holder generally
may elect to treat capital gain dividends, capital gains from the disposition of our capital stock and income designated as qualified
dividend income,