Company: RWT-PA
Filing Date: 2025-01-15
Form Type: 424B5
Source: 0001104659-25-003632
Chunk: 126

Company: REDWOOD TRUST INC
Filing Date: 2025-01-15
Form: 424B5
Chunk 126
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 to Non-U.S. Holders as actual distributions of capital gain dividends. Under this approach, the Non-U.S. Holders may be able
to offset as a credit against their U.S. federal income tax liability their proportionate share of the tax that we paid on such retained
net capital gains and to receive from the IRS a refund to the extent their proportionate share of such tax that we paid exceeds their
actual U.S. federal income tax liability. If we were to designate any portion of our net capital gain as retained net capital gain, Non-U.S.
Holders should consult their tax advisors regarding the taxation of such retained net capital gain.

Sale of Our Capital Stock

Except as described below
under “Material U.S. Federal Income Tax Considerations—Federal Income Tax Considerations for Holders of Our Capital Stock
and Debt Securities—Taxation of Non-U.S. Holders of Our Capital Stock—Redemption or Repurchase by Us,” gain realized
by a Non-U.S. Holder upon the sale, exchange or other taxable disposition of our capital stock generally will not be subject to U.S.
federal income tax unless such stock constitutes a USRPI. In general, stock of a domestic corporation that constitutes a “United
States real property holding corporation”, or a “USRPHC”, will constitute a USRPI unless certain exceptions apply.
A domestic corporation will constitute a USRPHC if 50% or more of the corporation’s assets on any of certain testing dates during
a prescribed testing period consist of interests in real property located within the United States, excluding for this purpose, interests
in real property solely in a capacity as creditor. We do not believe we are currently, and do not anticipate becoming, a USRPHC. However,
because the determination of whether we are a USRPHC depends on the fair market value of our USRPIs relative to the fair market value
of our non-U.S. real property interests and our other business assets, there can be no assurance we currently are not a USRPHC or will
not become one in the future.

Even if we were a USRPHC,
our capital stock will not constitute a USRPI so long as we are a “domestically controlled qualified investment entity.”
A “domestically controlled qualified investment entity” includes a REIT in which at all times during a five-year testing
period less than 50% in value of its stock is held directly or indirectly by non-United