If a tax-sharing agreement exists, it could require the parent company to compensate subsidiary 2 if the loss of subsidiary 2 is absorbed by the group. In this approach, a subsidiary is compensated for the loss of its tax attributes, whether or not those attributes have benefited the subsidiary at present. Alternatively, some tax distribution agreements take a “waiting-and-see” approach. Under this approach, Subsidiary 2 would not be compensated for the use of its loss in year 2. Instead, the group would wait to see if Subsidiary 2 would later produce sufficient revenue to benefit from its loss, provided that the loss had not previously been absorbed by the consolidation circle. For example, the agreement could stipulate that loss carry-forwards will be absorbed on a pro rata basis to the first, first and pro rata.