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@Tax888q wrote:

Has anyone ever converted accumulated NOLs to PALs on a current return instead of
amending prior-year returns?

they’re planning to sell some of the properties at a loss ... there will still be tax due due to depreciation recapture.

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I'm not aware of any provision to do that without amending.  The prior returns stated they were NOLs, and if that is wrong, I'm not aware of being able to 'fix' that on the current year return.  If they were passive losses, it sounds like those returns need to be amended.

Are they just long-term rentals?  Or any special situation like short-term rentals or other circumstances that make it more likely to be non-passive (although Material Participation may still be required)?

If they were truly sold at a tax-loss (sold for less than the Adjusted Basis), there is no tax.  In tax terminology, being sold for more than the Adjusted Basis is still a "gain", even if the selling price was less than the original purchase price.

It is a bit unusual to own a property for seven years and not being able to sell it for more than the purchase price.  Is it being sold to a related party or some other circumstance being sold at less than Fair Market Value?