Company: RWT-PA
Filing Date: 2025-03-03
Form Type: S-3ASR
Source: 0001104659-25-019828
Chunk: 66

Company: REDWOOD TRUST INC
Filing Date: 2025-03-03
Form: S-3ASR
Chunk 66
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porate income tax rate the net income generated by the nonqualifying assets, and (3) disclosing certain information
to the IRS.

Although we believe we have
satisfied the asset tests described above and plan to take steps to ensure that we satisfy such tests for any quarter with respect to
which retesting is to occur, there can be no assurance that we will always be successful, or will not require a reduction in our overall
interest in an issuer (including in a TRS). If we fail to cure any noncompliance with the asset tests in a timely manner, and the relief
provisions described above are not available, we would cease to qualify as a REIT.

Annual Distribution Requirements

To maintain our qualification
as a REIT, we are required to distribute dividends, other than capital gain dividends, to our stockholders each year in an amount at
least equal to the sum of:

| · | 90%                             
 of our REIT taxable income; and |

| · | 90%                                                                   
 of our after-tax net income, if any, from foreclosure property; minus |

| · | the                                                                                       
 excess of the sum of certain items of non-cash income over 5% of our REIT taxable income. |

For these purposes, our “REIT
taxable income” is computed without regard to the dividends paid deduction and our net capital gain. In addition, for purposes
of this test, non-cash income generally means income attributable to leveled stepped rents, original issue discount, cancellation of
indebtedness, or a like-kind exchange that is later determined to be taxable.

In addition, our REIT taxable
income will be reduced by any taxes we are required to pay on any gain we recognize from the disposition of any asset we acquired from
a corporation which was or had been a C corporation in a transaction in which our tax basis in the asset was less than the fair market
value of the asset, in each case determined as of the date on which we acquired the asset, within the five-year period following our
acquisition of such asset, as described above under “Material U.S. Federal Income Tax Considerations—Taxation of the
Company—General.”

Except as provided below,
a taxpayer’s deduction for net business interest expense will generally be limited to 30% of its taxable income, as adjusted for
certain items of income, gain, deduction or loss. Any business interest deduction that is disallowed due to this limitation may be carried
forward to