Sure it can. AAC is lossless.
Sorry, I meant AIFF..
I don't know if I can agree with that. Any digital audio system is exactly that, digital. It's made up of offs and ons. Anything between the off and the on is lost. However, earbuds are analog, but the device sending the signal is inherently digital. We cannot create what is missing from the digital recorded media in the first place. The advantage of AAC is that it is very high bandwidth digital and does not compress the existing data by throwing away what is considered by many programers as being outside the range of normal human hearing which all other sound storage and transmission systems routinely throw out to save file space and network bandwidth.
The problem with that is such frequencies that are thrown away as "useless" and "unbearable," do actually create beat frequencies when the higher frequencies are included which ARE within the range of human hearing and add to the quality of the sound when played back in a room or even a high quality headphone. Remove the higher frequencies and those beat frequencies will be missing in the playback. These beat frequencies are very difficult to record because they are dependent on the venue on the performance, the listening area, walls, absorption, and/or microphone placement.