The 1120 changed status to an 1120-S. Can I enter a net operating loss (NOL) in the 1120-S return?
An NOL is not relevant in an 1120-S return. If a corporation that has an NOL carryover becomes an S-corporation, the NOL is not entered in the 1120-S return. The loss must be tracked outside of Drake. The net operating loss will be available if the the S-corporation terminates its “S” status before the loss expires.
For more information see the Instructions for Form 1120-S and Publication 542. General rules for net operating losses are found in Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts. IRC sections include 172, 269, and 381-384.