The NOL may be used when filing tax forms in future years (currently 20) to offset taxable income reducing tax payable.
If we can estimate future tax rates, and we can expect sufficient taxable income to use the dedution with >50% probability, then a future tax benefit from carrying the NOL forward is "more likely than not."
We can then book the estimated benefit, and report it in our current income statement.
The future benefit is a deferred tax asset (DTA) reported on the Balance Sheet and
A balancing entry is a credit to tax expense.
If it is not certain the DTA benefit will be realized (income may not materialize as planned), we may have to book an allowance account (Contra DTA).