Basically, no. I assume you mean that you have a capital loss carryover. If you have another type of "loss carryforward," such as a net operating loss (NOL), ignore the rest of this reply and tell us what kind of loss carryforward you have.
A capital loss carryover can only be used to offset capital gains, not income from an IRA withdrawal. If the entire capital loss carryover is not used to offset capital gains, up to $3,000 of the remaining capital loss carryover can be used to offset other income, including IRA withdrawals. Any remaining capital loss will be carried over to the next year. So part of your capital loss carryover could be used to offset $3,000 of the IRA withdrawal, but you would have to pay tax on the remaining $87,000 from the IRA.
You have no choice about how the capital loss carryover is used. The calculations are done according to a fixed set of rules. TurboTax will do it automatically, following the tax rules.
IRA funds are not capital gains or losses. You invested pre-tax, and you pay regular income tax when you withdraw. You pay tax on whatever you actually withdraw, the gains and losses that occurred inside the IRA are completely ignored, only the amount you withdraw (more or less, depending on your investments) is taxable.
Then, because it is taxed as ordinary income, it has nothing to do with other capital gains or losses you might report on schedule D, and IRA income can't be offset by capital losses.
If it was "net operating loss" through the sole proprietorship, would this offset the IRA withdrawal income?
Yes. Losses from a business are considered ordinary income and therefore can be used to offset other income taxed at the ordinary income tax rates.
The net operating loss carry forward from a prior year would be reported on Schedule 1, line 8a which would then flow into your Form 1040 and potentially reduce your overall income, which would include an IRA withdrawal if applicable. Please see IRS Publication 536 for more details on how the net operating loss needs to be reported.