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Hi, all. I am running a Sonos Port through a Home Theatre Receiver. I believe this means the Sonos Port has a DAC that is converting the digital input to analog and sending the analog signal to the Home Theatre Receiver (which has it’s own DAC).

This DAC to DAC situation can’t be great for sound quality. Is there a best practice or an optimum way to handle this situation in order to get the best sound quality?

Thanks!

Incorrect.  DAC is digital to analog converter.  Since you can't convert to analog twice, there's only one DAC in use at any one time.  If you are using the analog out on the Port, the DAC is in the Port.  If using a digital out on the Port, the DAC is in the receiver.  Either way, you aren't going to hear much difference, the quality (or lack thereof) of one DAC over another is mostly audiophile nonsense.  Making a DAC that is transparent to the source costs very little  If the DAC is otherwise coloring the sound it means the manufacturer has purposefully altered the transparency to the source, which anyone could do via a basic digital equalizer.