diff --git a/compiler/backend/src/org/jetbrains/jet/codegen/ImplementationBodyCodegen.java b/compiler/backend/src/org/jetbrains/jet/codegen/ImplementationBodyCodegen.java
index c10ef5b387a..27d71186619 100644
--- a/compiler/backend/src/org/jetbrains/jet/codegen/ImplementationBodyCodegen.java
+++ b/compiler/backend/src/org/jetbrains/jet/codegen/ImplementationBodyCodegen.java
@@ -1358,14 +1358,10 @@ public class ImplementationBodyCodegen extends ClassBodyCodegen {
             @Override
             public void visitThisExpression(JetThisExpression expression) {
                 DeclarationDescriptor descriptor = bindingContext.get(BindingContext.REFERENCE_TARGET, expression.getInstanceReference());
-                if (descriptor instanceof ClassDescriptor) {
-                    // @todo for now all our classes are inner so no need to lookup this. change it when we have real inners
-                }
-                else {
-                    assert descriptor instanceof CallableDescriptor;
-                    if (context.getCallableDescriptorWithReceiver() != descriptor) {
-                        context.lookupInContext(descriptor, null, state, true);
-                    }
+                assert descriptor instanceof CallableDescriptor ||
+                       descriptor instanceof ClassDescriptor : "'This' reference target should be class or callable descriptor but was " + descriptor;
+                if (context.getCallableDescriptorWithReceiver() != descriptor) {
+                    context.lookupInContext(descriptor, null, state, true);
                 }
             }
         };
diff --git a/compiler/backend/src/org/jetbrains/jet/codegen/context/CodegenContext.java b/compiler/backend/src/org/jetbrains/jet/codegen/context/CodegenContext.java
index 64355ed58cd..9841af9ba65 100644
--- a/compiler/backend/src/org/jetbrains/jet/codegen/context/CodegenContext.java
+++ b/compiler/backend/src/org/jetbrains/jet/codegen/context/CodegenContext.java
@@ -338,7 +338,13 @@ public abstract class CodegenContext<T extends DeclarationDescriptor> {
             result = result == null || myOuter == null ? myOuter : StackValue.composed(result, myOuter);
         }
 
-        StackValue resultValue = parentContext != null ? parentContext.lookupInContext(d, result, state, ignoreNoOuter) : null;
+        StackValue resultValue;
+        if (myOuter != null && getEnclosingClass() == d) {
+            resultValue = result;
+        } else {
+            resultValue = parentContext != null ? parentContext.lookupInContext(d, result, state, ignoreNoOuter) : null;
+        }
+
         if (myOuter != null && resultValue != null) {
             closure.setCaptureThis();
         }
diff --git a/compiler/testData/codegen/box/objects/kt4086.kt b/compiler/testData/codegen/box/objects/kt4086.kt
new file mode 100644
index 00000000000..e28c8e5fca4
--- /dev/null
+++ b/compiler/testData/codegen/box/objects/kt4086.kt
@@ -0,0 +1,12 @@
+trait N
+
+open class Base(n: N)
+
+class Derived : Base(object: N{}) {
+
+}
+
+fun box() : String {
+    Derived()
+    return "OK"
+}
\ No newline at end of file
diff --git a/compiler/tests/org/jetbrains/jet/codegen/generated/BlackBoxCodegenTestGenerated.java b/compiler/tests/org/jetbrains/jet/codegen/generated/BlackBoxCodegenTestGenerated.java
index 714cfbc3e8e..a2e37e0f4ad 100644
--- a/compiler/tests/org/jetbrains/jet/codegen/generated/BlackBoxCodegenTestGenerated.java
+++ b/compiler/tests/org/jetbrains/jet/codegen/generated/BlackBoxCodegenTestGenerated.java
@@ -3466,6 +3466,11 @@ public class BlackBoxCodegenTestGenerated extends AbstractBlackBoxCodegenTest {
             doTest("compiler/testData/codegen/box/objects/kt3684.kt");
         }
         
+        @TestMetadata("kt4086.kt")
+        public void testKt4086() throws Exception {
+            doTest("compiler/testData/codegen/box/objects/kt4086.kt");
+        }
+        
         @TestMetadata("kt535.kt")
         public void testKt535() throws Exception {
             doTest("compiler/testData/codegen/box/objects/kt535.kt");