Company: RWT-PA
Filing Date: 2025-03-03
Form Type: S-3ASR
Source: 0001104659-25-019828
Chunk: 74

Company: REDWOOD TRUST INC
Filing Date: 2025-03-03
Form: S-3ASR
Chunk 74
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 our capital stock
for the year bears to the total dividends, as determined for U.S. federal income tax purposes, paid or made available to holders
of all classes of our capital stock for the year. In addition, except as otherwise required by law, we will make a similar allocation
with respect to any undistributed long-term capital gains which are to be included in the long-term capital gains of our stockholders,
based on the allocation of the capital gain amount which would have resulted if those undistributed long-term capital gains had been
distributed as “capital gain dividends” by us to our stockholders.

Retention of Net Capital Gains

We may elect to retain, rather
than distribute as a capital gain dividend, all or a portion of our net capital gains. If we make this election, we would pay tax on
our retained net capital gains. In addition, to the extent we so elect, our earnings and profits (determined for U.S. federal income
tax purposes) would be adjusted accordingly, and a U.S. Holder generally would:

| · | include                                                                                       
 its pro rata share of our undistributed capital gain in computing its long-term capital gains 
 in its U.S. federal income tax return for its taxable year in which the last day of           
 our taxable year falls, subject to certain limitations as to the amount that is includable;   |

| · | be                                                                                             
 deemed to have paid its share of the capital gains tax imposed on us on the designated amounts 
 included in the U.S. Holder’s income as long-term capital gain;                                |

| · | receive                                                     
 a credit or refund for the amount of tax deemed paid by it; |

| · | increase                                                                                       
 the adjusted tax basis of our capital stock by the difference between the amount of includable 
 gains and the tax deemed to have been paid by it; and                                          |

| · | in                                                                                               
 the case of a U.S. Holder that is a corporation, appropriately adjust its earnings and           
 profits for the retained capital gains in accordance with Treasury Regulations to be promulgated 
 by the IRS.                                                                                      |

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Passive Activity Losses and Investment Interest Limitations

Distributions we make and
gain arising from the sale or exchange of our capital stock by a U.S. Holder will not be treated as passive activity income. As
a result, U.S. Holders generally will not be able to apply any “passive losses” against this income or gain.