Company: RWT-PA
Filing Date: 2025-01-15
Form Type: 424B5
Source: 0001104659-25-003632
Chunk: 92

Company: REDWOOD TRUST INC
Filing Date: 2025-01-15
Form: 424B5
Chunk 92
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certain U.S. shareholders of such non-U.S. corporations may be required to include in their income currently their proportionate share
of the earnings of such a corporation, whether or not such earnings are distributed. This could affect our ability to comply with the
REIT income tests and distribution requirement. See “Material U.S. Federal Income Tax Considerations—Taxation of the Company—Income
Tests” and “Material U.S. Federal Income Tax Considerations—Taxation of the Company—Annual Distribution Requirements.”
We currently do not own interests in any non-U.S. TRS, but we may acquire interests in such TRSs in the future.

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We may hold a significant
number of assets in one or more TRSs, subject to the limitation that securities in TRSs may not represent more than 20% of our total
assets (25% for taxable years beginning after July 30, 2008 and before January 1, 2018). We may engage in securitization transactions
through our TRSs, and to the extent that we acquire loans with an intention of selling such loans in a manner that might expose us to
a 100% tax on “prohibited transactions,” such loans may be acquired by a TRS.

Certain restrictions imposed
on TRSs are intended to ensure that such entities will be subject to appropriate levels of U.S. federal income taxation. For example,
if amounts are paid to a REIT or deducted by a TRS due to transactions between a REIT, its tenants and/or the TRS, that exceed the amount
that would be paid to or deducted by a party in an arm’s-length transaction, the REIT generally will be subject to an excise tax
equal to 100% of such excess. Furthermore, income of a TRS that is understated as a result of services provided to us or on our behalf
generally will be subject to a 100% penalty tax. See “Material U.S. Federal Income Tax Considerations—Taxation of the Company—Income
Tests—Penalty Tax.”

Ownership of Interests in Subsidiary REITs

We own and may acquire direct
or indirect interests in one or more entities that have elected or will elect to be taxed as REITs under the Code (each, a “Subsidiary
REIT”). A Subsidiary REIT is subject to the various REIT qualification requirements and