Company: RWT-PA
Filing Date: 2025-01-15
Form Type: 424B5
Source: 0001104659-25-003632
Chunk: 118

Company: REDWOOD TRUST INC
Filing Date: 2025-01-15
Form: 424B5
Chunk 118
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 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.                                                                            |

Passive Activity Losses and Investment Interest Limitations

Distributions we make and
gain arising from the sale or exchange by a U.S. Holder of our capital stock 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. A U.S. Holder generally
may elect to treat capital gain dividends, capital gains from the disposition of our capital stock and income designated as qualified
dividend income, as described in “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—Tax Rates” below, as
investment income for purposes of computing the investment interest limitation, but in such case, the holder will be taxed at ordinary
income rates on such amount. Other distributions we make, to the extent they do not constitute a return of capital, generally will be
treated as investment income for purposes of computing the investment interest limitation.

Dispositions 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 Taxable U.S. Holders of Our Capital Stock—Redemption or Repurchase by Us,” if a U.S.
Holder sells or disposes of shares of our capital stock, it