Company: RWT-PA
Filing Date: 2025-01-16
Form Type: 424B5
Source: 0001104659-25-004099
Chunk: 97

Company: REDWOOD TRUST INC
Filing Date: 2025-01-16
Form: 424B5
Chunk 97
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 types of non-U.S. shareholders; and                        |

| · | is taxable                                                                                                                       
 at the U.S. federal corporate income tax rate, currently 21%, to the REIT, rather than its shareholders, to the extent allocable 
 to the REIT’s shares held in record name by disqualified organizations (generally, tax-exempt entities not subject to unrelated  
 business income tax, including governmental organizations).                                                                      |

The manner in which excess
inclusion income is calculated, or would be allocated to our stockholders, including allocations among shares of different classes of
stock, is not clear under current law. As required by IRS guidance, we intend to make such determinations using a reasonable method.

Tax-exempt investors, RIC
or REIT investors, non-U.S. investors and taxpayers with net operating losses should carefully consider the tax consequences described
above, and are urged to consult their tax advisors with respect to the U.S. federal income tax consequences of an investment in our capital
stock.

If a subsidiary partnership
of ours that we do not wholly own, directly or through one or more disregarded entities, were a TMP, the foregoing rules would not
apply. Rather, the partnership that is a TMP would be treated as a corporation for U.S. federal income tax purposes, and potentially
would be subject to U.S. federal corporate income tax or withholding tax. In addition, this characterization would alter our income and
asset test calculations, and could adversely affect our compliance with those requirements. We intend to monitor the structure of any
TMPs in which we will have an interest to ensure that they will not adversely affect our qualification as a REIT.

Income Tests

We must satisfy two gross
income requirements annually to maintain our qualification as a REIT. First, in each taxable year we must derive directly or indirectly
at least 75% of our gross income (excluding gross income from prohibited transactions, certain hedging transactions, and certain foreign
currency gains) from investments relating to real property or mortgages on real property, including “rents from real property,”
dividends from other REITs and, in certain circumstances, interest, or certain types of temporary investments. Second, in each taxable
year we must derive at least 95% of our gross income (excluding gross income from prohibited transactions, certain hedging transactions,
and certain foreign currency gains) from the real property investments described above or dividends, interest and gain from the sale
or disposition of stock or securities, or from any