Company: RWT-PA
Filing Date: 2025-01-16
Form Type: 424B5
Source: 0001104659-25-004099
Chunk: 88

Company: REDWOOD TRUST INC
Filing Date: 2025-01-16
Form: 424B5
Chunk 88
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 perhaps retroactively, by legislative, administrative or judicial action at any time. Latham & Watkins
LLP has no obligation to update its opinion subsequent to the date of such opinion.

Provided we qualify for taxation
as a REIT, we generally will not be required to pay U.S. federal corporate income taxes on our REIT taxable income that we currently
distribute to our stockholders. This treatment substantially eliminates the “double taxation” that ordinarily results from
investment in a C corporation. A C corporation is a corporation that generally is required to pay tax at the corporate level. Double
taxation means taxation once at the corporate level when income is earned and once again at the stockholder level when the income is
distributed. We will, however, be required to pay U.S. federal income tax as follows:

| · | We will be                                                                                                                          
 required to pay regular U.S. federal corporate income tax on any undistributed REIT taxable income, including undistributed capital 
 gain.                                                                                                                               |

| · | If we have                                                                                                                           
 (1) net income from the sale or other disposition of “foreclosure property” held primarily for sale to customers                     
 in the ordinary course of business or (2) other nonqualifying income from foreclosure property, we will be required to pay regular   
 U.S. federal corporate income tax on this income. To the extent that income from foreclosure property is otherwise qualifying income 
 for purposes of the 75% gross income test, this tax is not applicable. Subject to certain other requirements, foreclosure property   
 generally is defined as property we acquired through foreclosure or after a default on a loan secured by the property or a lease     
 of the property. See “Material U.S. Federal Income Tax Considerations—Taxation of the Company—Income Tests—Foreclosure               
 Property.”                                                                                                                           |

| · | We will be                                                                                                                              
 required to pay a 100% tax on any net income from prohibited transactions. Prohibited transactions are, in general, sales or other      
 taxable dispositions of property, other than foreclosure property, held as inventory or primarily for sale to customers in the ordinary 
 course of business.                                                                                                                     |

| · | If we fail                                                                                                                             
 to satisfy the 75% gross income test or the 95% gross income test, as described below, but have otherwise maintained our qualification 
 as a REIT because certain other requirements are met, we will be required to pay a tax equal to (1) the greater of (A) the             
 amount