diff --git a/compiler/fir/resolve/src/org/jetbrains/kotlin/fir/resolve/transformers/body/resolve/FirImplicitBodyResolve.kt b/compiler/fir/resolve/src/org/jetbrains/kotlin/fir/resolve/transformers/body/resolve/FirImplicitBodyResolve.kt
index 77ee05d0d0a..a0cc06237f9 100644
--- a/compiler/fir/resolve/src/org/jetbrains/kotlin/fir/resolve/transformers/body/resolve/FirImplicitBodyResolve.kt
+++ b/compiler/fir/resolve/src/org/jetbrains/kotlin/fir/resolve/transformers/body/resolve/FirImplicitBodyResolve.kt
@@ -5,11 +5,13 @@
 
 package org.jetbrains.kotlin.fir.resolve.transformers.body.resolve
 
+import org.jetbrains.kotlin.descriptors.Visibilities
 import org.jetbrains.kotlin.fir.*
 import org.jetbrains.kotlin.fir.declarations.*
 import org.jetbrains.kotlin.fir.declarations.synthetic.FirSyntheticProperty
 import org.jetbrains.kotlin.fir.declarations.utils.hasExplicitBackingField
 import org.jetbrains.kotlin.fir.declarations.utils.isLocal
+import org.jetbrains.kotlin.fir.declarations.utils.visibility
 import org.jetbrains.kotlin.fir.diagnostics.ConeSimpleDiagnostic
 import org.jetbrains.kotlin.fir.diagnostics.DiagnosticKind
 import org.jetbrains.kotlin.fir.resolve.FirRegularTowerDataContexts
@@ -19,13 +21,14 @@ import org.jetbrains.kotlin.fir.resolve.providers.firProvider
 import org.jetbrains.kotlin.fir.resolve.transformers.AdapterForResolveProcessor
 import org.jetbrains.kotlin.fir.resolve.transformers.FirTransformerBasedResolveProcessor
 import org.jetbrains.kotlin.fir.resolve.transformers.ReturnTypeCalculator
+import org.jetbrains.kotlin.fir.resolve.transformers.ReturnTypeCalculatorForFullBodyResolve
 import org.jetbrains.kotlin.fir.resolve.transformers.contracts.runContractResolveForLocalClass
 import org.jetbrains.kotlin.fir.scopes.FakeOverrideTypeCalculator
 import org.jetbrains.kotlin.fir.scopes.fakeOverrideSubstitution
 import org.jetbrains.kotlin.fir.scopes.impl.delegatedWrapperData
-import org.jetbrains.kotlin.fir.symbols.lazyResolveToPhase
-import org.jetbrains.kotlin.fir.symbols.impl.FirSyntheticPropertySymbol
 import org.jetbrains.kotlin.fir.symbols.impl.FirCallableSymbol
+import org.jetbrains.kotlin.fir.symbols.impl.FirSyntheticPropertySymbol
+import org.jetbrains.kotlin.fir.symbols.lazyResolveToPhase
 import org.jetbrains.kotlin.fir.types.FirImplicitTypeRef
 import org.jetbrains.kotlin.fir.types.FirResolvedTypeRef
 import org.jetbrains.kotlin.fir.types.builder.buildErrorTypeRef
@@ -217,6 +220,11 @@ private class ReturnTypeCalculatorWithJump(
     var outerTowerDataContexts: FirRegularTowerDataContexts? = null
 
     override fun tryCalculateReturnTypeOrNull(declaration: FirCallableDeclaration): FirResolvedTypeRef {
+        // Local declarations must be handled by `ReturnTypeCalculatorForFullBodyResolve` to avoid resolution cycles in LL FIR.
+        if (declaration.visibility == Visibilities.Local) {
+            return ReturnTypeCalculatorForFullBodyResolve.tryCalculateReturnType(declaration)
+        }
+
         if (declaration is FirValueParameter && declaration.returnTypeRef is FirImplicitTypeRef) {
             declaration.replaceReturnTypeRef(
                 buildErrorTypeRef {
diff --git a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/localFactorial.fir.kt b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/localFactorial.fir.kt
index 8f1200ca411..fc52c00306a 100644
--- a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/localFactorial.fir.kt
+++ b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/localFactorial.fir.kt
@@ -1,4 +1,3 @@
-// FIR_IDE_IGNORE
 // See KT-6271
 fun foo() {
     fun fact(n: Int) = {
diff --git a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/localFactorial.kt b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/localFactorial.kt
index 81e181f99a1..dd9dc91bb1d 100644
--- a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/localFactorial.kt
+++ b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/localFactorial.kt
@@ -1,4 +1,3 @@
-// FIR_IDE_IGNORE
 // See KT-6271
 fun foo() {
     fun fact(n: Int) = {
diff --git a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveFun.fir.kt b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveFun.fir.kt
index 831c654f61d..a4b6e0861eb 100644
--- a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveFun.fir.kt
+++ b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveFun.fir.kt
@@ -1,4 +1,3 @@
-// FIR_IDE_IGNORE
 fun foo() {
     fun bar() = (fun() = bar())
 }
diff --git a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveFun.kt b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveFun.kt
index 9a099374232..06c65c151ed 100644
--- a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveFun.kt
+++ b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveFun.kt
@@ -1,4 +1,3 @@
-// FIR_IDE_IGNORE
 fun foo() {
     fun bar() = (fun() = <!TYPECHECKER_HAS_RUN_INTO_RECURSIVE_PROBLEM_ERROR!><!DEBUG_INFO_MISSING_UNRESOLVED!>bar<!>()<!>)
 }
diff --git a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveLambda.fir.kt b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveLambda.fir.kt
index 3f2ccb269a3..962d4b4eadb 100644
--- a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveLambda.fir.kt
+++ b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveLambda.fir.kt
@@ -1,4 +1,3 @@
-// FIR_IDE_IGNORE
 fun foo() {
     fun bar() = {
         bar()
diff --git a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveLambda.kt b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveLambda.kt
index 56099b7c8e4..f387bb43b60 100644
--- a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveLambda.kt
+++ b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveLambda.kt
@@ -1,4 +1,3 @@
-// FIR_IDE_IGNORE
 fun foo() {
     fun bar() = {
         <!TYPECHECKER_HAS_RUN_INTO_RECURSIVE_PROBLEM_ERROR!><!DEBUG_INFO_MISSING_UNRESOLVED!>bar<!>()<!>
diff --git a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/selfCall.fir.kt b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/selfCall.fir.kt
index e34d8a69e51..0e7c9cdcffb 100644
--- a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/selfCall.fir.kt
+++ b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/selfCall.fir.kt
@@ -1,4 +1,3 @@
-// FIR_IDE_IGNORE
 fun foo() {
     fun bar1() = bar1()
 
diff --git a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/selfCall.kt b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/selfCall.kt
index 0d401d069b6..c8555c8a729 100644
--- a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/selfCall.kt
+++ b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/selfCall.kt
@@ -1,4 +1,3 @@
-// FIR_IDE_IGNORE
 fun foo() {
     fun bar1() = <!TYPECHECKER_HAS_RUN_INTO_RECURSIVE_PROBLEM_ERROR!><!DEBUG_INFO_MISSING_UNRESOLVED!>bar1<!>()<!>
 
diff --git a/compiler/testData/diagnostics/tests/regressions/kt9384.fir.kt b/compiler/testData/diagnostics/tests/regressions/kt9384.fir.kt
index bb10628dd87..239a81e2aad 100644
--- a/compiler/testData/diagnostics/tests/regressions/kt9384.fir.kt
+++ b/compiler/testData/diagnostics/tests/regressions/kt9384.fir.kt
@@ -1,4 +1,3 @@
-// FIR_IDE_IGNORE
 // !DIAGNOSTICS: -UNUSED_PARAMETER
 fun main(args: Array<String>) {
     fun f() = run {
diff --git a/compiler/testData/diagnostics/tests/regressions/kt9384.kt b/compiler/testData/diagnostics/tests/regressions/kt9384.kt
index 2806a764dae..2457bb32cb6 100644
--- a/compiler/testData/diagnostics/tests/regressions/kt9384.kt
+++ b/compiler/testData/diagnostics/tests/regressions/kt9384.kt
@@ -1,4 +1,3 @@
-// FIR_IDE_IGNORE
 // !DIAGNOSTICS: -UNUSED_PARAMETER
 fun main(args: Array<String>) {
     fun f() = run {