Company: ADAMM
Filing Date: 2025-07-01
Form Type: 424B5
Source: 0001104659-25-064730
Chunk: 40

Company: ADAMAS TRUST, INC.
Filing Date: 2025-07-01
Form: 424B5
Chunk 40
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 dividends the REIT pays to its stockholders will be considered to be excess inclusion income. In addition, although the law is unclear, the IRS has taken the position that a REIT is taxable at the highest U.S. federal corporate income tax rate on the portion of any excess inclusion income that it derives from an equity interest in a TMP equal to the percentage of its stock that is held in record name by “disqualified organizations.” Our subsidiary REIT currently owns an interest in a TMP. The ownership of our subsidiary REIT is structured such that no excess inclusion income should be allocated to the Company or its shareholders; rather the tax liability on the related excess inclusion income is to be borne by a TRS of the Company. We will indirectly bear such tax economically as the shareholder of such TRS.

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TABLE OF CONTENTS

#### Excess Mortgage Servicing Spreads
. We intend to invest in excess mortgage servicing spreads, also known as “Excess MSRs.” The IRS has issued private letter rulings to other REITs holding that Excess MSRs are qualifying assets for purposes of the 75% asset test and produce qualifying income for purposes of the 75% gross income test. Any income that is qualifying income for the 75% gross income test is also qualifying income for the 95% gross income test. A private letter ruling may be relied upon only by the taxpayer to whom it is issued, and the IRS may revoke a private letter ruling. Based on the analysis in those private letter rulings and other IRS guidance regarding Excess MSRs, we generally intend to treat our investments in Excess MSRs as qualifying assets for purposes of the 75% asset test to the extent the underlying mortgage loans are qualifying for purposes of such test, and as producing qualifying income for purposes of both the 75% and 95% gross income tests to the extent the underlying mortgage loans produce qualifying income for purposes of those tests, as described above. However, we do not intend to seek our own private letter ruling. Thus, the IRS could take the position that our Excess MSRs do not produce qualifying income, presumably by treating a portion of the income we receive from an Excess MSR as reasonable compensation for servicing the underlying mortgage loans. A successful challenge of our treatment of our Excess MSRs could result in our being treated as failing the 75% asset test, the 75% gross income test, and/or the 95% gross income test. If we failed any