Company: RWT-PA
Filing Date: 2025-03-03
Form Type: S-3ASR
Source: 0001104659-25-019828
Chunk: 42

Company: REDWOOD TRUST INC
Filing Date: 2025-03-03
Form: S-3ASR
Chunk 42
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 In addition, this opinion was based upon
our factual representations set forth in this prospectus. Additionally, to the extent we make certain investments, such as investments
in commercial mortgage loan securitizations, the accuracy of such opinion will also depend on the accuracy of certain opinions rendered
to us in connection with such transactions. Moreover, our qualification and taxation as a REIT depend upon our ability to meet the various
qualification tests imposed under the Code, which are discussed below, including through actual operating results, asset composition,
distribution levels and diversity of stock ownership, the results of which have not been and will not be reviewed by Latham & Watkins
LLP. Accordingly, no assurance can be given that our actual results of operations for any particular taxable year have satisfied or will
satisfy those requirements. Further, the anticipated U.S. federal income tax treatment described in this discussion may be changed,
perhaps retroactively, by legislative, administrative or judicial action at any time. Latham & Watkins LLP has no obligation to update
its opinion subsequent to the date of such opinion.

Provided we qualify for taxation
as a REIT, we generally will not be required to pay U.S. federal corporate income taxes on our REIT taxable income that we currently
distribute to our stockholders. This treatment substantially eliminates the “double taxation” that ordinarily results from
investment in a C corporation. A C corporation is a corporation that generally is required to pay tax at the corporate level. Double
taxation means taxation once at the corporate level when income is earned and once again at the stockholder level when the income is
distributed. We will, however, be required to pay U.S. federal income tax as follows:

| · | We                                                                                     
 will be required to pay regular U.S. federal corporate income tax on any undistributed 
 REIT taxable income, including undistributed capital gain.                             |

| · | If                                                                                                 
 we have (1) net income from the sale or other disposition of “foreclosure property”                
 held primarily for sale to customers in the ordinary course of business or (2) other nonqualifying 
 income from foreclosure property, we will be required to pay regular U.S. federal corporate        
 income tax on this income. To the extent that income from foreclosure property is otherwise        
 qualifying income for purposes of the 75% gross income test, this tax is not applicable.           
 Subject to certain other requirements, foreclosure property generally is defined as property       
 we acquired through foreclosure or after a default on