In certain embodiments, to eliminate DC leakage into surrounding AC values, scaling stage within a photo overlap transform operator is modified such that the off-diagonal elements of the associated scaling matrix have the values of 0. In certain embodiments, the on-diagonal scaling matrix are given the values (0.5, 2). In some embodiments, the scaling is performed using a combination of reversible modulo arithmetic and lifting steps. In yet other embodiments, amount of DC leakage is estimated at the encoder, and preprocessing occurs to mitigate amount of leakage, with the bitstream signaling that preprocessing has occurred. A decoder may then read the signal and use the information to mitigate DC leakage.