Best DAC for 27" iMac

Hello everyone! I have a question I'm sure somebody can answer for me.
I have a 27"iMac with my entire music collection on there. I have my speakers hooked up through my Sony DA4ES Receiver via interconnects and a Y-Splitter
I want to get the most out of my audio for music listening purposes. I know the next thing that will improve my audio the most is getting a DAC. I would like to know which DAC you guys would recommend me to use. I have a budget in mind of $800 or below. I would like the feedback of those who also have an iMac as well to see what their experiences are with a DAC. I'd like to thank everybody who reads this in advance and for their input.

A DAC can make a huge difference, but for your gadget, I recommend you just use your Sony ES receiver and save up for a DAC that will give you a noticeable improvement. All you need to do this is a "mini toslink to standard toslink cable". Stay away from "mini toslink" adaptors.

That Sony ES receiver has a fairly good DAC section that will sound good in "direct stereo" mode. There is a "mini optical" output on the iMac. If you have any questions or need help, feel free to contact me.
Thank you for your feedback Ballan. In the back of my iMac is the minitoslink connector the one that looks like the headphone jack? if so would this cable do the work?
Yes, you've got it! That will allow you to send a direct digital signal to your receiver, and should improve the sound quality. From there, I recommend saving for a DAC and amp that will have better stereo (two channel) performance. Don't forget to have fun and keep the music flowing. ;)
You may wish to surf over to which will be very helpful, no doubt.

Out of curiosity, at what resolution did you save your music? If you were to use uncompressed (WAV or AIFF) or at least Apple lossless, you will have peace of mind knowing that at least the source material is at full bit depth. It wouldn't make sense to use MP3 or AAC if your pursuit is sound quality.
Why the implication that Apple Lossless is anything less than aiff or wav?
Apple lossless is a compression technology, though very good and theoretically lossless. AIFF on the other hand has no compression algorithm at all and renders bit for bit.

I believe that's where the inference that it's somewhat "less" than AIFF or WAV comes into play.

Considering the low cost of storage these days, many would choose to go bit for bit vs. any compression whatsoever, even a good scenario like Apple Lossless.
If you can get a bit-perfect copy from a compressed format, which you can with Apple Lossess and FLAC, than go for the (storage) space saving.

The 30% to 40% reduction in file size allowed by FLAC or ALAC are worth it and don't compromise playback.
a lot of my music is in Flac and i have some in WAV but the majority of my music collection is in 320mp3. I am in the process of re-ripping my cds to wav to replace the existing lesser formats.
Will this toslink cable be good enough or should i invest in something with a better build quality?
The Mono Price cable isn't "better". If you really want an optical cable that's "better", look at the VanDenHul Opticoupler and Wireworld SuperNova 6. Both of these cables can be made with "mini" on one end and "standard" on the other. They are true "polished glass" fibers.

iTunes will not play FLAC, but it seems like you are already in the process of reripping your collection. AIFF or Apple Lossless are the best to use with a Mac/iTunes. Apple Lossless takes up about half the space and sounds the same (to me), and it can always be transcoded into other "bit perfect" formats using third party software programs.
I just got an Aune Mini USB DAC. It's cheap and, in my office setup (with an iMac and Apple Lossless files), sounds terrific. It's got a headphone amp (reputedly a clone of the Graham Slee Novo) that sounds good, too. WAY under your budget, and maybe worth a try for that reason alone.
I would like to thank everybody for their informative feedback. For now I will get the cable from mono price and I'll let you guys know how much difference in terms of SQ i notice.
Cheers and happy listening,
From what I understand, the DACs in most modern receivers are more than adequate unless you want to spend $1000 + for an outboard DAC.
Why the implication that Apple Lossless is anything less than aiff or wav?"

I've heard it said that the sound quality of Apple Lossless can vary based on system loading. So while it should in theory be identical to an uncompressed file, a Lossless file which might sound great on a lightly taxed system could be degraded if decoded by a heavily loaded system. The computer I use for work is also used for music playback. Disc space is cheap, so I decided to give it the benefit of the doubt and go with AIFF.

Robin, Once you get your DAC sorted out, I recommend you experiment with Amarra and Pure Music programs. I noticed an immediate difference in my systems, to the point where I have a hard time listening to iTunes with out PM running.
Thanks again for everybody's input. I am now using the toslink cable to run digital out to my speakers but I noticed one significant change that I'm not sure if it is normal or not. My speakers now reproduce much more static on some files that I played earlier with the interconnect cables. The file i am playing is in 320mp3. When playing other files in Aiff format or Flac I dont hear the static that I'm hearing with this particular one in 320mp3. I have changed my Audio Midi Setup to 96000/24 from the default 48000/16 without noticing any changes. Anybody have any ideas? I was hoping to notice a much "cleaner" sound with the toslink upgrade.
Thanks in advance,
Leave the "midi settings" to 16/44, and make sure to close/reopen iTunes so that it properly resets. Have the MP3 files been transcoded at some point? The MP3 should not sound as good, but there should not be "static". If the file was poorly imported or transcoded, it might have been corrupted. This can also be caused by scratched discs or a drive that was out of alignment. It might be time for you to re-import "rip" those tracks again.