Drake Tax - NOL Carried from 1120 to 1120-S

Entering an net operating loss (NOL) in the 1120-S return after the 1120 status changed to an 1120-S

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 Tax. The net operating loss will be available if 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. IRC sections include 172, 269, and 381-384.