Company: RWT-PA
Filing Date: 2025-01-15
Form Type: 424B5
Source: 0001104659-25-003632
Chunk: 119

Company: REDWOOD TRUST INC
Filing Date: 2025-01-15
Form: 424B5
Chunk 119
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 will recognize gain or loss for U.S. federal income tax purposes in an amount
equal to the difference between the amount of cash and the fair market value of any property received on the sale or other disposition
and the U.S. Holder’s adjusted tax basis in the shares. This gain or loss, except as provided below, will be a long-term capital
gain or loss if the U.S. Holder has held such capital stock for more than one year. However, if a U.S. Holder recognizes a loss upon
the sale or other disposition of our capital stock that it has held for six months or less, after applying certain holding period rules,
the loss recognized will be treated as a long-term capital loss to the extent the U.S. Holder received distributions from us which were
required to be treated as long-term capital gains. The deductibility of capital losses is subject to limitations.

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Redemption or Repurchase by Us

A redemption or repurchase
of shares of our capital stock will be treated under Section 302 of the Code as a distribution (and taxable as a dividend to the
extent of our current and accumulated earnings and profits as described above under “Material U.S. Federal Income Tax Considerations—Federal
Income Tax Considerations for Holders of Our Capital Stock and Debt Securities—Taxation of Taxable U.S. Holders of Our Capital
Stock—Distributions Generally”) unless the redemption or repurchase satisfies one of the tests set forth in Section 302(b) of
the Code and is therefore treated as a sale or exchange of the redeemed or repurchased shares. The redemption or repurchase generally
will be treated as a sale or exchange if it:

| · | is “substantially                                  
 disproportionate” with respect to the U.S. Holder, |

| · | results in                                                            
 a “complete redemption” of the U.S. Holder’s stock interest in us, or |

| · | is “not                                                                
 essentially equivalent to a dividend” with respect to the U.S. Holder, |

all within the meaning of Section 302(b) of
the Code.

In determining whether any
of these tests has been met, shares of our capital stock, including common stock and other equity interests in us, considered to be owned
by the U.S. Holder by reason of certain constructive ownership rules set forth in the Code, as well as shares of our capital stock
actually owned by the U.S. Holder, generally must be taken into