Company: RWT-PA
Filing Date: 2025-01-15
Form Type: 424B5
Source: 0001104659-25-003632
Chunk: 91

Company: REDWOOD TRUST INC
Filing Date: 2025-01-15
Form: 424B5
Chunk 91
---
 qualified REIT subsidiary
is not subject to U.S. federal income tax, and our ownership of the stock of a qualified REIT subsidiary will not violate the restrictions
on ownership of securities, as described below under “Material U.S. Federal Income Tax Considerations—Taxation of the Company—Asset
Tests.”

Ownership of Interests in TRSs

From time to time, we may
own interests in one or more companies that have elected, together with us, to be treated as our TRSs, and we may acquire securities
in additional TRSs in the future. A TRS is a corporation (or other entity treated as a corporation for U.S. federal income tax purposes),
other than a REIT, in which a REIT directly or indirectly holds stock, and that has made a joint election with such REIT to be treated
as a TRS. If a TRS owns more than 35% of the total voting power or value of the outstanding securities of another corporation, such other
corporation will also be treated as a TRS. Other than some activities relating to lodging and health care facilities, a TRS may generally
engage in any business. A TRS is subject to U.S. federal income tax as a regular C corporation. A REIT is not treated as holding the
assets of a TRS or as receiving any income that the TRS earns. Rather, the stock issued by the TRS is an asset in the hands of the REIT,
and the REIT generally recognizes as income the dividends, if any, that it receives from the TRS. A REIT’s ownership of securities
of a TRS is not subject to the 5% or 10% asset test described below. See “Material U.S. Federal Income Tax Considerations—Taxation
of the Company—Asset Tests.” For taxable years beginning after December 31, 2017, taxpayers are subject to a limitation
on their ability to deduct net business interest generally equal to 30% of adjusted taxable income, subject to certain exceptions. See
“Material U.S. Federal Income Tax Considerations—Taxation of the Company—Annual Distribution Requirements.” While
not certain, this provision may limit the ability of our TRSs to deduct interest, which could increase their taxable income.

Non-U.S. TRSs that are not
engaged in trade or business in the United States for tax purposes generally are not subject to U.S. corporate income taxation. However,