Company: RWT-PA
Filing Date: 2025-01-15
Form Type: 424B5
Source: 0001104659-25-003632
Chunk: 110

Company: REDWOOD TRUST INC
Filing Date: 2025-01-15
Form: 424B5
Chunk 110
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 property; minus |

| · | the excess                                                                         
 of the sum of certain items of non-cash income over 5% of our REIT taxable income. |

For these purposes, our “REIT
taxable income” is computed without regard to the dividends paid deduction and our net capital gain. In addition, for purposes
of this test, non-cash income generally means income attributable to leveled stepped rents, original issue discount, cancellation of
indebtedness, or a like-kind exchange that is later determined to be taxable.

In addition, our REIT taxable
income will be reduced by any taxes we are required to pay on any gain we recognize from the disposition of any asset we acquired from
a corporation which was or had been a C corporation in a transaction in which our tax basis in the asset was less than the fair market
value of the asset, in each case determined as of the date on which we acquired the asset, within the five-year period following our
acquisition of such asset, as described above under “Material U.S. Federal Income Tax Considerations—Taxation of the Company—General.”

For taxable years beginning
after December 31, 2017, and except as provided below, a taxpayer’s deduction for net business interest expense will generally
be limited to 30% of its taxable income, as adjusted for certain items of income, gain, deduction or loss. Any business interest deduction
that is disallowed due to this limitation may be carried forward to future taxable years, subject to special rules applicable to partnerships.
If we or any of our subsidiary partnerships are subject to this interest expense limitation, our REIT taxable income for a taxable year
may be increased. Taxpayers that conduct certain real estate businesses may elect not to have this interest expense limitation apply
to them, provided that they use an alternative depreciation system to depreciate certain property. We do not believe that we or any of
our subsidiary partnerships will be eligible to make this election.

We generally must pay, or
be treated as paying, the distributions described above in the taxable year to which they relate. At our election, a distribution will
be treated as paid in a taxable year if it is declared before we timely file our tax return for such year and paid on or before the first
regular dividend payment after such declaration, provided such payment is made during the 12-month period following the close of such
year. These distributions are treated as received by our stockholders in the year in which they are paid