Company: TWO-PC
Filing Date: 2025-11-06
Form Type: S-3ASR
Source: 0001104659-25-107870
Chunk: 61

Company: TWO HARBORS INVESTMENT CORP.
Filing Date: 2025-11-06
Form: S-3ASR
Chunk 61
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 for U.S. federal income tax purposes as taxable distributions to such holders. Accordingly, participation in the dividend reinvestment feature of the Plan will generally result in a U.S. stockholder being treated, for U.S. federal income tax purposes, as having received a distribution equal to (i) the fair market value of the shares on the date actually acquired from us and (ii) the U.S. stockholder’s pro rata share of the brokerage commissions paid by us, if any, in connection with the purchase of common shares either on the open market or in a privately negotiated transaction. Such distributions will be taxable as income or gain or reduce the U.S. stockholder’s adjusted tax basis in its common shares, or some combination of these treatments, under the rules described above under “— Distributions.” These distributions may give rise to a liability for the payment of income tax without providing such U.S. stockholder with the immediate cash to pay the tax when it becomes due. Unless an alternative method is elected, a U.S. stockholder’s tax basis in the shares of common stock acquired under the dividend reinvestment feature of the Plan generally will equal the fair market value of the shares on the date the shares were acquired plus the U.S. stockholder’s pro rata share of the brokerage commission paid by us, if any.

The treatment of direct share purchase programs such as the direct share purchase feature of the Plan is not entirely clear, with most of the guidance being private letter rulings issued by the IRS on which other taxpayers are not entitled to rely. While in older private letter rulings the IRS suggested that a stockholder who participates in both a direct stock purchase plan and a dividend reinvestment plan is treated as receiving at the time of the purchase a distribution equal to the discount amount of the stock, in a recent private letter ruling the IRS concluded that there is no deemed distribution in connection with shares acquired at a discount through a direct stock purchase plan. In that ruling, the IRS did not make any distinction

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between persons who participate only in the direct stock purchase plan and persons who participate in both plans. We intend to take the position set forth in that recent private letter ruling. However, because the private letter ruling was not issued to us, we have no legal right to rely on its conclusion, and it is possible the IRS might take a different position. For this or other reasons, we may in the future take a different position with respect to the direct share purchase