Deductions & credits
You do not deal with the 2020 unallowed loss on your S-Corp's return, but on your personal return.
On your personal return, when entering the 2021 Schedule K-1 from the S-corp, in the interview, you'll find a screen titled Other situations. On that screen, check the box saying I have at risk losses carrying over from 2020. Then Click Continue at the bottom of the screen (see attached screenshot).
On the next page, you can enter the 2020 unallowed loss as a negative number in the second column labelled Carryover Prior year loss.
