So the DAC is in the reciever?

Yes. But this gets confusing quick. My receiver (Denon PMA 600ne) has a Burr-Brown PCM5141 DAC (digital-to-analog convertor). Its accessed via optical, coaxial or Bluetooth. Many receivers have HDMI and usb as well, but mine does not. If any of these inputs are used, a digital signal is being sent to the internal DAC before heading out to the speakers. So all I need my phone/laptop to do is send the uncorruted digital data from a flac file to the receiver. Now here's the confusing part: I had to by an adapter to go between USB and my Coaxial or Optical input. It abdolutely does not convert the digital signal to analog, but rather adapts the data from the usb to a form that my receiver can take (coaxial/optical). It's an SMSL PO100. It works great, but it's advertises itself as a DAC (which it's not). It's also important to make sure the device sending the data isn't using its internal (generally inferior) DAC or any other audio engine that may apply downsampling, compression etc. There are only a handful of apps that can bypass the audio engine of the OS you're using. I found foobar2000 for free on Windows, and UAPP for 7 bucks on Android.