For the most part, you are correct, the passive loss carryovers are available to negate ordinary income that may occur due to depreciation recapture.
The unused passive losses are used to reduce ordinary income in the current year. Depreciation is recaptured as ordinary income to the extent you have a gain on the sale of the property. So, indirectly the loss carryovers can be used against depreciation recaptured, since they are both ordinary income/loss.
@nettestars
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