diff --git a/compiler/backend/src/org/jetbrains/kotlin/codegen/inline/InlineCodegen.java b/compiler/backend/src/org/jetbrains/kotlin/codegen/inline/InlineCodegen.java
index 03b44d12e07..2dd9da1bdeb 100644
--- a/compiler/backend/src/org/jetbrains/kotlin/codegen/inline/InlineCodegen.java
+++ b/compiler/backend/src/org/jetbrains/kotlin/codegen/inline/InlineCodegen.java
@@ -34,6 +34,7 @@ import org.jetbrains.kotlin.load.kotlin.PackageClassUtils;
 import org.jetbrains.kotlin.name.ClassId;
 import org.jetbrains.kotlin.psi.*;
 import org.jetbrains.kotlin.renderer.DescriptorRenderer;
+import org.jetbrains.kotlin.resolve.BindingContext;
 import org.jetbrains.kotlin.resolve.DescriptorToSourceUtils;
 import org.jetbrains.kotlin.resolve.DescriptorUtils;
 import org.jetbrains.kotlin.resolve.calls.model.ResolvedCall;
@@ -272,16 +273,27 @@ public class InlineCodegen extends CallGenerator {
 
             final CallableMemberDescriptor descriptor = codegen.getContext().getContextDescriptor();
 
-            final boolean isLambda = isFunctionExpression(descriptor) || isFunctionLiteral(descriptor);
-
             @Override
             public boolean isMyLabel(@NotNull String name) {
                 if (InlineCodegenUtil.ROOT_LABEL.equals(name)) {
-                    return !isLambda;
+                    return !isFunctionLiteral(descriptor);
                 }
-                else {
-                    return descriptor.getName().asString().equals(name);
+
+                //check function name if exists
+                if (descriptor.getName().asString().equals(name)) {
+                    return true;
                 }
+
+                //check functional expression labels
+                if (isFunctionExpression(descriptor)) {
+                    PsiElement element = DescriptorToSourceUtils.descriptorToDeclaration(descriptor);
+                    if (element != null && element.getParent() instanceof JetLabeledExpression) {
+                        String labelName = ((JetLabeledExpression) element.getParent()).getLabelName();
+                        return name.equals(labelName);
+                    }
+                }
+
+                return false;
             }
         };
         List<MethodInliner.PointForExternalFinallyBlocks> infos = MethodInliner.processReturns(adapter, labelOwner, true, null);
diff --git a/compiler/testData/codegen/boxInline/nameless/extension.1.kt b/compiler/testData/codegen/boxInline/functionExpression/extension.1.kt
similarity index 100%
rename from compiler/testData/codegen/boxInline/nameless/extension.1.kt
rename to compiler/testData/codegen/boxInline/functionExpression/extension.1.kt
diff --git a/compiler/testData/codegen/boxInline/nameless/extension.2.kt b/compiler/testData/codegen/boxInline/functionExpression/extension.2.kt
similarity index 100%
rename from compiler/testData/codegen/boxInline/nameless/extension.2.kt
rename to compiler/testData/codegen/boxInline/functionExpression/extension.2.kt
diff --git a/compiler/testData/codegen/boxInline/nonLocalReturns/returnFromFunctionExpr.1.kt b/compiler/testData/codegen/boxInline/nonLocalReturns/returnFromFunctionExpr.1.kt
new file mode 100644
index 00000000000..4518ac23c79
--- /dev/null
+++ b/compiler/testData/codegen/boxInline/nonLocalReturns/returnFromFunctionExpr.1.kt
@@ -0,0 +1,23 @@
+//NO_CHECK_LAMBDA_INLINING
+fun test(): String = fun (): String {
+    foo { return "OK" }
+    return "fail"
+} ()
+
+fun test2(): String = (@l fun (): String {
+    foo { return@l "OK" }
+    return "fail"
+}) ()
+
+fun test3(): String = (@l fun bar(): String {
+    foo { return@bar "OK" }
+    return "fail"
+}) ()
+
+fun box(): String {
+    if (test() != "OK") return "fail 1: ${test()}"
+
+    if (test2() != "OK") return "fail 2: ${test2()}"
+
+    return test3()
+}
\ No newline at end of file
diff --git a/compiler/testData/codegen/boxInline/nonLocalReturns/returnFromFunctionExpr.2.kt b/compiler/testData/codegen/boxInline/nonLocalReturns/returnFromFunctionExpr.2.kt
new file mode 100644
index 00000000000..111e1a6eed5
--- /dev/null
+++ b/compiler/testData/codegen/boxInline/nonLocalReturns/returnFromFunctionExpr.2.kt
@@ -0,0 +1,3 @@
+inline fun foo(f: () -> Unit) {
+    f()
+}
\ No newline at end of file
diff --git a/compiler/tests/org/jetbrains/kotlin/codegen/generated/BlackBoxInlineCodegenTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/codegen/generated/BlackBoxInlineCodegenTestGenerated.java
index 220e5743a72..73b5a6d19e8 100644
--- a/compiler/tests/org/jetbrains/kotlin/codegen/generated/BlackBoxInlineCodegenTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/codegen/generated/BlackBoxInlineCodegenTestGenerated.java
@@ -287,6 +287,21 @@ public class BlackBoxInlineCodegenTestGenerated extends AbstractBlackBoxInlineCo
         }
     }
 
+    @TestMetadata("compiler/testData/codegen/boxInline/functionExpression")
+    @TestDataPath("$PROJECT_ROOT")
+    @RunWith(JUnit3RunnerWithInners.class)
+    public static class FunctionExpression extends AbstractBlackBoxInlineCodegenTest {
+        public void testAllFilesPresentInFunctionExpression() throws Exception {
+            JetTestUtils.assertAllTestsPresentByMetadata(this.getClass(), new File("compiler/testData/codegen/boxInline/functionExpression"), Pattern.compile("^(.+)\\.1.kt$"), true);
+        }
+
+        @TestMetadata("extension.1.kt")
+        public void testExtension() throws Exception {
+            String fileName = JetTestUtils.navigationMetadata("compiler/testData/codegen/boxInline/functionExpression/extension.1.kt");
+            doTestMultiFileWithInlineCheck(fileName);
+        }
+    }
+
     @TestMetadata("compiler/testData/codegen/boxInline/lambdaClassClash")
     @TestDataPath("$PROJECT_ROOT")
     @RunWith(JUnit3RunnerWithInners.class)
@@ -362,21 +377,6 @@ public class BlackBoxInlineCodegenTestGenerated extends AbstractBlackBoxInlineCo
         }
     }
 
-    @TestMetadata("compiler/testData/codegen/boxInline/nameless")
-    @TestDataPath("$PROJECT_ROOT")
-    @RunWith(JUnit3RunnerWithInners.class)
-    public static class Nameless extends AbstractBlackBoxInlineCodegenTest {
-        public void testAllFilesPresentInNameless() throws Exception {
-            JetTestUtils.assertAllTestsPresentByMetadata(this.getClass(), new File("compiler/testData/codegen/boxInline/nameless"), Pattern.compile("^(.+)\\.1.kt$"), true);
-        }
-
-        @TestMetadata("extension.1.kt")
-        public void testExtension() throws Exception {
-            String fileName = JetTestUtils.navigationMetadata("compiler/testData/codegen/boxInline/nameless/extension.1.kt");
-            doTestMultiFileWithInlineCheck(fileName);
-        }
-    }
-
     @TestMetadata("compiler/testData/codegen/boxInline/noInline")
     @TestDataPath("$PROJECT_ROOT")
     @RunWith(JUnit3RunnerWithInners.class)
@@ -460,6 +460,12 @@ public class BlackBoxInlineCodegenTestGenerated extends AbstractBlackBoxInlineCo
             doTestMultiFileWithInlineCheck(fileName);
         }
 
+        @TestMetadata("returnFromFunctionExpr.1.kt")
+        public void testReturnFromFunctionExpr() throws Exception {
+            String fileName = JetTestUtils.navigationMetadata("compiler/testData/codegen/boxInline/nonLocalReturns/returnFromFunctionExpr.1.kt");
+            doTestMultiFileWithInlineCheck(fileName);
+        }
+
         @TestMetadata("simple.1.kt")
         public void testSimple() throws Exception {
             String fileName = JetTestUtils.navigationMetadata("compiler/testData/codegen/boxInline/nonLocalReturns/simple.1.kt");
diff --git a/compiler/tests/org/jetbrains/kotlin/jvm/compiler/CompileKotlinAgainstInlineKotlinTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/jvm/compiler/CompileKotlinAgainstInlineKotlinTestGenerated.java
index 7bcbabd15d6..3316a5eaea9 100644
--- a/compiler/tests/org/jetbrains/kotlin/jvm/compiler/CompileKotlinAgainstInlineKotlinTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/jvm/compiler/CompileKotlinAgainstInlineKotlinTestGenerated.java
@@ -287,6 +287,21 @@ public class CompileKotlinAgainstInlineKotlinTestGenerated extends AbstractCompi
         }
     }
 
+    @TestMetadata("compiler/testData/codegen/boxInline/functionExpression")
+    @TestDataPath("$PROJECT_ROOT")
+    @RunWith(JUnit3RunnerWithInners.class)
+    public static class FunctionExpression extends AbstractCompileKotlinAgainstInlineKotlinTest {
+        public void testAllFilesPresentInFunctionExpression() throws Exception {
+            JetTestUtils.assertAllTestsPresentByMetadata(this.getClass(), new File("compiler/testData/codegen/boxInline/functionExpression"), Pattern.compile("^(.+)\\.1.kt$"), true);
+        }
+
+        @TestMetadata("extension.1.kt")
+        public void testExtension() throws Exception {
+            String fileName = JetTestUtils.navigationMetadata("compiler/testData/codegen/boxInline/functionExpression/extension.1.kt");
+            doBoxTestWithInlineCheck(fileName);
+        }
+    }
+
     @TestMetadata("compiler/testData/codegen/boxInline/lambdaClassClash")
     @TestDataPath("$PROJECT_ROOT")
     @RunWith(JUnit3RunnerWithInners.class)
@@ -362,21 +377,6 @@ public class CompileKotlinAgainstInlineKotlinTestGenerated extends AbstractCompi
         }
     }
 
-    @TestMetadata("compiler/testData/codegen/boxInline/nameless")
-    @TestDataPath("$PROJECT_ROOT")
-    @RunWith(JUnit3RunnerWithInners.class)
-    public static class Nameless extends AbstractCompileKotlinAgainstInlineKotlinTest {
-        public void testAllFilesPresentInNameless() throws Exception {
-            JetTestUtils.assertAllTestsPresentByMetadata(this.getClass(), new File("compiler/testData/codegen/boxInline/nameless"), Pattern.compile("^(.+)\\.1.kt$"), true);
-        }
-
-        @TestMetadata("extension.1.kt")
-        public void testExtension() throws Exception {
-            String fileName = JetTestUtils.navigationMetadata("compiler/testData/codegen/boxInline/nameless/extension.1.kt");
-            doBoxTestWithInlineCheck(fileName);
-        }
-    }
-
     @TestMetadata("compiler/testData/codegen/boxInline/noInline")
     @TestDataPath("$PROJECT_ROOT")
     @RunWith(JUnit3RunnerWithInners.class)
@@ -460,6 +460,12 @@ public class CompileKotlinAgainstInlineKotlinTestGenerated extends AbstractCompi
             doBoxTestWithInlineCheck(fileName);
         }
 
+        @TestMetadata("returnFromFunctionExpr.1.kt")
+        public void testReturnFromFunctionExpr() throws Exception {
+            String fileName = JetTestUtils.navigationMetadata("compiler/testData/codegen/boxInline/nonLocalReturns/returnFromFunctionExpr.1.kt");
+            doBoxTestWithInlineCheck(fileName);
+        }
+
         @TestMetadata("simple.1.kt")
         public void testSimple() throws Exception {
             String fileName = JetTestUtils.navigationMetadata("compiler/testData/codegen/boxInline/nonLocalReturns/simple.1.kt");