Company: RWT-PA
Filing Date: 2025-01-16
Form Type: 424B5
Source: 0001104659-25-004099
Chunk: 121

Company: REDWOOD TRUST INC
Filing Date: 2025-01-16
Form: 424B5
Chunk 121
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the Code and is therefore treated as a sale or exchange of the redeemed or repurchased shares. The redemption or repurchase generally
will be treated as a sale or exchange if it:

| · | is “substantially                                  
 disproportionate” with respect to the U.S. Holder, |

| · | results in                                                            
 a “complete redemption” of the U.S. Holder’s stock interest in us, or |

| · | is “not                                                                
 essentially equivalent to a dividend” with respect to the U.S. Holder, |

all within the meaning of Section 302(b) of
the Code.

In determining whether any
of these tests has been met, shares of our capital stock, including common stock and other equity interests in us, considered to be owned
by the U.S. Holder by reason of certain constructive ownership rules set forth in the Code, as well as shares of our capital stock
actually owned by the U.S. Holder, generally must be taken into account. Because the determination as to whether any of the alternative
tests of Section 302(b) of the Code will be satisfied with respect to the U.S. Holder depends upon the facts and circumstances
at the time that the determination must be made, U.S. Holders are advised to consult their tax advisors to determine such tax treatment.

If a redemption or repurchase
of shares of our capital stock is treated as a distribution, the amount of the distribution will be measured by the amount of cash and
the fair market value of any property received. See “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—Distributions
Generally.” A U.S. Holder’s adjusted tax basis in the redeemed or repurchased shares generally will be transferred to the
holder’s remaining shares of our capital stock, if any. If a U.S. Holder owns no other shares of our capital stock, under certain
circumstances, such basis may be transferred to a related person or it may be lost entirely. Prospective investors should consult their
tax advisors regarding the U.S. federal income tax consequences of a redemption or repurchase of our capital stock.

If a redemption or repurchase
of shares of our capital stock is not treated as a distribution, it will be treated as a taxable sale or exchange in the manner described
under “Material U.S. Federal Income Tax Considerations—Federal Income