billy & kim,
AAC is a LOSSY codec/format, so it does NOT support lossless.
However, I take all my Hi-Res music and downsample it to higher grade AAC, which statistically has been proven to sound EXACTLY the same as FLAC/ALAC. Basically, anything over 256 kbps AAC will sound exactly the same as CD-Quality FLAC (to be extra safe, I set them to 320 kbps AAC). It's been proven, and I tried doing an ABX test myself and could NOT tell a difference. The advantage is obviously that 1) the smaller the file, the less power is required to play by your player and 2) The smaller the file, the less room it takes! lol Now my backups however I only downsample to CD-Quality FLAC/ALAC, primarily b/c they are lossless and that if I ever want to do anything with them in the future, any conversions I do won't result in potential artifacts and/or distortions, unlike lossy which very well can. Say a new format comes along 3 years from now that somehow makes your music sound better. If you've got say, your favorite Hi-Res albums stored as FLAC or ALAC, you can convert these, no problem. But if they're lossy, they may not sound as good post-conversion. Basically you're "future-proofing" your songs by at least backing them up as lossless files. Again, there's no point at all in keeping a DSD or 24/192 or 24/96 file as is unless you just have a PLETHORA of space lol......... downsampling them to 16/44.1 (CD-Quality) won't make any AUDIBLE changes to the sound. Your dog might notice a difference lol, but you won't.
Oh, and there's one exception to what I said above........... mp3s. They suck. lol I notice a difference, and others have statistically-speaking too. Tell-tale signs of an mp3 include wishy-washy cymbals, that "hodge-podge" sound that resembles listening to music threw a barely cracked open door or a tiny hole in the wall, muddy bass that seems to just cover everything, etc. A great example of this would be the new Led Zeppelin Remasters in Hi-Res. Listen to a song like the mp3 version of "Babe I'm Gonna Leave You" from their first album, and then listen to the Hi-Res version. Not only does what I just said about signs apply, you also will notice that each instrument & vocals sound both more widespread & distinct/isolated. Guitar fills that were more distant-sounding on the mp3 now on the Hi-Res version have been pulled up to the forefront. And if you happen to have a solid music player (like a portable amp/DAC) & solid headphones, you will notice everything even more clearly!