diff --git a/compiler/frontend.java/src/org/jetbrains/kotlin/load/java/sam/SingleAbstractMethodUtils.java b/compiler/frontend.java/src/org/jetbrains/kotlin/load/java/sam/SingleAbstractMethodUtils.java
index 9998a2e1de5..c64949ef4af 100644
--- a/compiler/frontend.java/src/org/jetbrains/kotlin/load/java/sam/SingleAbstractMethodUtils.java
+++ b/compiler/frontend.java/src/org/jetbrains/kotlin/load/java/sam/SingleAbstractMethodUtils.java
@@ -86,7 +86,7 @@ public class SingleAbstractMethodUtils {
     }
 
     @Nullable
-    private static JetType getFunctionTypeForSamType(@NotNull JetType samType, boolean isSamConstructor) {
+    private static JetType getFunctionTypeForSamType(@NotNull JetType samType) {
         // e.g. samType == Comparator<String>?
 
         ClassifierDescriptor classifier = samType.getConstructor().getDeclarationDescriptor();
@@ -103,11 +103,11 @@ public class SingleAbstractMethodUtils {
                 JetType type = fixProjections(substitute);
                 if (type == null) return null;
 
-                if (JvmPackage.getPLATFORM_TYPES() && !isSamConstructor && TypesPackage.isNullabilityFlexible(samType)) {
+                if (JvmPackage.getPLATFORM_TYPES() && TypesPackage.isNullabilityFlexible(samType)) {
                     return LazyJavaTypeResolver.FlexibleJavaClassifierTypeCapabilities.create(type, TypeUtils.makeNullable(type));
                 }
 
-                return TypeUtils.makeNullableAsSpecified(type, !isSamConstructor && samType.isMarkedNullable());
+                return TypeUtils.makeNullableAsSpecified(type, samType.isMarkedNullable());
             }
         }
         return null;
@@ -151,7 +151,7 @@ public class SingleAbstractMethodUtils {
 
         TypeParameters typeParameters = recreateAndInitializeTypeParameters(samInterface.getTypeConstructor().getParameters(), result);
 
-        JetType parameterTypeUnsubstituted = getFunctionTypeForSamType(samInterface.getDefaultType(), true);
+        JetType parameterTypeUnsubstituted = getFunctionTypeForSamType(samInterface.getDefaultType());
         assert parameterTypeUnsubstituted != null : "couldn't get function type for SAM type " + samInterface.getDefaultType();
         JetType parameterType = typeParameters.substitutor.substitute(parameterTypeUnsubstituted, Variance.IN_VARIANCE);
         assert parameterType != null : "couldn't substitute type: " + parameterTypeUnsubstituted +
@@ -177,7 +177,7 @@ public class SingleAbstractMethodUtils {
     }
 
     public static boolean isSamType(@NotNull JetType type) {
-        return getFunctionTypeForSamType(type, /* irrelevant */ false) != null;
+        return getFunctionTypeForSamType(type) != null;
     }
 
     public static boolean isSamAdapterNecessary(@NotNull FunctionDescriptor fun) {
@@ -240,7 +240,7 @@ public class SingleAbstractMethodUtils {
         assert returnTypeUnsubstituted != null : "Creating SAM adapter for not initialized original: " + original;
 
         TypeSubstitutor substitutor = typeParameters.substitutor;
-        JetType returnType = substitutor.substitute(returnTypeUnsubstituted, Variance.OUT_VARIANCE);
+        JetType returnType = substitutor.substitute(returnTypeUnsubstituted, Variance.INVARIANT);
         assert returnType != null : "couldn't substitute type: " + returnTypeUnsubstituted +
                                         ", substitutor = " + substitutor;
 
@@ -261,7 +261,7 @@ public class SingleAbstractMethodUtils {
         List<ValueParameterDescriptor> valueParameters = new ArrayList<ValueParameterDescriptor>(originalValueParameters.size());
         for (ValueParameterDescriptor originalParam : originalValueParameters) {
             JetType originalType = originalParam.getType();
-            JetType functionType = getFunctionTypeForSamType(originalType, false);
+            JetType functionType = getFunctionTypeForSamType(originalType);
             JetType newTypeUnsubstituted = functionType != null ? functionType : originalType;
             JetType newType = substitutor.substitute(newTypeUnsubstituted, Variance.IN_VARIANCE);
             assert newType != null : "couldn't substitute type: " + newTypeUnsubstituted + ", substitutor = " + substitutor;
diff --git a/compiler/frontend.java/src/org/jetbrains/kotlin/synthetic/SamAdapterFunctionsScope.kt b/compiler/frontend.java/src/org/jetbrains/kotlin/synthetic/SamAdapterFunctionsScope.kt
index 5d82db21cfc..0bbbe1a187b 100644
--- a/compiler/frontend.java/src/org/jetbrains/kotlin/synthetic/SamAdapterFunctionsScope.kt
+++ b/compiler/frontend.java/src/org/jetbrains/kotlin/synthetic/SamAdapterFunctionsScope.kt
@@ -107,7 +107,7 @@ class SamAdapterFunctionsScope(storageManager: StorageManager) : JetScope by Jet
             val typeParameters = ArrayList<TypeParameterDescriptor>(typeParamsSum.size())
             val typeSubstitutor = DescriptorSubstitutor.substituteTypeParameters(typeParamsSum, TypeSubstitution.EMPTY, this, typeParameters)
 
-            val returnType = typeSubstitutor.safeSubstitute(originalFunction.returnType!!, Variance.OUT_VARIANCE)
+            val returnType = typeSubstitutor.safeSubstitute(originalFunction.returnType!!, Variance.INVARIANT)
             val receiverType = typeSubstitutor.safeSubstitute(ownerClass.defaultType, Variance.INVARIANT)
             val valueParameters = SingleAbstractMethodUtils.createValueParametersForSamAdapter(originalFunction, this, typeSubstitutor)
 
diff --git a/compiler/testData/diagnostics/tests/j+k/canDeclareIfSamAdapterIsInherited.kt b/compiler/testData/diagnostics/tests/j+k/canDeclareIfSamAdapterIsInherited.kt
new file mode 100644
index 00000000000..ada826483cd
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/j+k/canDeclareIfSamAdapterIsInherited.kt
@@ -0,0 +1,11 @@
+// FILE: Super.java
+class Super {
+    void foo(Runnable r) {
+    }
+}
+
+// FILE: Sub.kt
+class Sub() : Super() {
+    fun foo(<!UNUSED_PARAMETER!>r<!> : (() -> Unit)?) {
+    }
+}
\ No newline at end of file
diff --git a/compiler/testData/diagnostics/tests/j+k/canDeclareIfSamAdapterIsInherited.txt b/compiler/testData/diagnostics/tests/j+k/canDeclareIfSamAdapterIsInherited.txt
new file mode 100644
index 00000000000..5058ba17dbf
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/j+k/canDeclareIfSamAdapterIsInherited.txt
@@ -0,0 +1,18 @@
+package
+
+internal final class Sub : Super {
+    public constructor Sub()
+    public open override /*1*/ /*fake_override*/ fun equals(/*0*/ other: kotlin.Any?): kotlin.Boolean
+    internal final fun foo(/*0*/ r: (() -> kotlin.Unit)?): kotlin.Unit
+    public/*package*/ open override /*1*/ /*fake_override*/ fun foo(/*0*/ r: java.lang.Runnable!): kotlin.Unit
+    public open override /*1*/ /*fake_override*/ fun hashCode(): kotlin.Int
+    public open override /*1*/ /*fake_override*/ fun toString(): kotlin.String
+}
+
+public/*package*/ open class Super {
+    public/*package*/ constructor Super()
+    public open override /*1*/ /*fake_override*/ fun equals(/*0*/ other: kotlin.Any?): kotlin.Boolean
+    public/*package*/ open fun foo(/*0*/ r: java.lang.Runnable!): kotlin.Unit
+    public open override /*1*/ /*fake_override*/ fun hashCode(): kotlin.Int
+    public open override /*1*/ /*fake_override*/ fun toString(): kotlin.String
+}
diff --git a/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/GenericClass.kt b/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/GenericClass.kt
index f9382a8e2ff..f4263c59e8c 100644
--- a/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/GenericClass.kt
+++ b/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/GenericClass.kt
@@ -3,8 +3,6 @@ fun foo(javaClass: JavaClass<String>): String {
     return javaClass.doSomething("", 1) { s: String -> "" }
 }
 
-fun useString(<!UNUSED_PARAMETER!>s<!>: String) {}
-
 // FILE: JavaClass.java
 public class JavaClass<T> {
     public T doSomething(T t, int anInt, I<T> i) { return t; }
diff --git a/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/GenericClass.txt b/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/GenericClass.txt
index 1302d9a59e6..75588baa2b6 100644
--- a/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/GenericClass.txt
+++ b/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/GenericClass.txt
@@ -1,7 +1,6 @@
 package
 
 internal fun foo(/*0*/ javaClass: JavaClass<kotlin.String>): kotlin.String
-internal fun useString(/*0*/ s: kotlin.String): kotlin.Unit
 
 public open class JavaClass</*0*/ T : kotlin.Any!> {
     public constructor JavaClass</*0*/ T : kotlin.Any!>()
diff --git a/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/GenericMethodInGenericClass.kt b/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/GenericMethodInGenericClass.kt
index e5b833f7f59..862e33587fc 100644
--- a/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/GenericMethodInGenericClass.kt
+++ b/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/GenericMethodInGenericClass.kt
@@ -1,11 +1,13 @@
 // FILE: KotlinFile.kt
-fun foo(javaClass: JavaClass<Int>): String {
-    return javaClass.doSomething("", 1) { it }
+fun foo(javaClass: JavaClass<Int>) {
+    val <!UNUSED_VARIABLE!>a<!>: String = javaClass.doSomething1("", 1) { p: String -> p }
+    val <!UNUSED_VARIABLE!>b<!>: String = javaClass.doSomething2("", 1, true) { p: Int -> p }
 }
 
 // FILE: JavaClass.java
 public class JavaClass<X> {
-    public <T> T doSomething(T t, X x, I<T> i) { return i.run(t); }
+    public <T> T doSomething1(T t, X x, I<T> i) { return i.run(t); }
+    public <T> T doSomething2(T t, X x, boolean p, I<X> i) { return i.run(t); }
 }
 
 interface I<T> {
diff --git a/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/GenericMethodInGenericClass.txt b/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/GenericMethodInGenericClass.txt
index 805ea565a61..93dcdd709be 100644
--- a/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/GenericMethodInGenericClass.txt
+++ b/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/GenericMethodInGenericClass.txt
@@ -1,10 +1,11 @@
 package
 
-internal fun foo(/*0*/ javaClass: JavaClass<kotlin.Int>): kotlin.String
+internal fun foo(/*0*/ javaClass: JavaClass<kotlin.Int>): kotlin.Unit
 
 public open class JavaClass</*0*/ X : kotlin.Any!> {
     public constructor JavaClass</*0*/ X : kotlin.Any!>()
-    public open fun </*0*/ T : kotlin.Any!> doSomething(/*0*/ t: T!, /*1*/ x: X!, /*2*/ i: I<T!>!): T!
+    public open fun </*0*/ T : kotlin.Any!> doSomething1(/*0*/ t: T!, /*1*/ x: X!, /*2*/ i: I<T!>!): T!
+    public open fun </*0*/ T : kotlin.Any!> doSomething2(/*0*/ t: T!, /*1*/ x: X!, /*2*/ p: kotlin.Boolean, /*3*/ i: I<X!>!): T!
     public open override /*1*/ /*fake_override*/ fun equals(/*0*/ other: kotlin.Any?): kotlin.Boolean
     public open override /*1*/ /*fake_override*/ fun hashCode(): kotlin.Int
     public open override /*1*/ /*fake_override*/ fun toString(): kotlin.String
diff --git a/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/InnerClassInGeneric.kt b/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/InnerClassInGeneric.kt
index f341d80d957..f99a6cd28f9 100644
--- a/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/InnerClassInGeneric.kt
+++ b/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/InnerClassInGeneric.kt
@@ -1,20 +1,16 @@
 // FILE: KotlinFile.kt
-fun foo(javaClass: JavaClass<Int>) {
+fun foo(javaClass: JavaClass<Int>): Int {
     val inner = javaClass.createInner<String>()
-    inner.doSomething(1, "") {
-        bar()
-    }
+    return inner.doSomething(1, "") { }
 }
 
-fun bar(){}
-
 // FILE: JavaClass.java
 public class JavaClass<T> {
     public <X> Inner<X> createInner() {
         return new Inner<X>();
     }
 
-    public class Inner<X>{
-        public void doSomething(T t, X x, Runnable runnable) { runnable.run(); }
+    public interface Inner<X>{
+        public T doSomething(T t, X x, Runnable runnable);
     }
 }
diff --git a/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/InnerClassInGeneric.txt b/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/InnerClassInGeneric.txt
index 4bb0cb41320..f04815c76db 100644
--- a/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/InnerClassInGeneric.txt
+++ b/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/InnerClassInGeneric.txt
@@ -1,7 +1,6 @@
 package
 
-internal fun bar(): kotlin.Unit
-internal fun foo(/*0*/ javaClass: JavaClass<kotlin.Int>): kotlin.Unit
+internal fun foo(/*0*/ javaClass: JavaClass<kotlin.Int>): kotlin.Int
 
 public open class JavaClass</*0*/ T : kotlin.Any!> {
     public constructor JavaClass</*0*/ T : kotlin.Any!>()
@@ -10,11 +9,13 @@ public open class JavaClass</*0*/ T : kotlin.Any!> {
     public open override /*1*/ /*fake_override*/ fun hashCode(): kotlin.Int
     public open override /*1*/ /*fake_override*/ fun toString(): kotlin.String
 
-    public open inner class Inner</*0*/ X : kotlin.Any!> {
-        public constructor Inner</*0*/ X : kotlin.Any!>()
-        public open fun doSomething(/*0*/ t: T!, /*1*/ x: X!, /*2*/ runnable: java.lang.Runnable!): kotlin.Unit
+    public interface Inner</*0*/ X : kotlin.Any!> {
+        public abstract fun doSomething(/*0*/ t: T!, /*1*/ x: X!, /*2*/ runnable: java.lang.Runnable!): T!
         public open override /*1*/ /*fake_override*/ fun equals(/*0*/ other: kotlin.Any?): kotlin.Boolean
         public open override /*1*/ /*fake_override*/ fun hashCode(): kotlin.Int
         public open override /*1*/ /*fake_override*/ fun toString(): kotlin.String
     }
+
+    // Static members
+    public final /*synthesized*/ fun </*0*/ X : kotlin.Any!> Inner(/*0*/ function: (T!, X!, java.lang.Runnable!) -> T!): JavaClass.Inner<X>
 }
diff --git a/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/PackageLocal.kt b/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/PackageLocal.kt
index 7dfd4ec5669..30f213a7723 100644
--- a/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/PackageLocal.kt
+++ b/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/PackageLocal.kt
@@ -1,4 +1,4 @@
-// FILE: KotlinFile.kt
+// FILE: KotlinFile1.kt
 package k
 
 import JavaClass
@@ -7,6 +7,11 @@ fun foo(javaClass: JavaClass) {
     javaClass.<!INVISIBLE_MEMBER!>doSomething<!> <!TYPE_MISMATCH!>{ }<!>
 }
 
+// FILE: KotlinFile2.kt
+fun foo(javaClass: JavaClass) {
+    javaClass.doSomething { }
+}
+
 // FILE: JavaClass.java
 public class JavaClass {
     void doSomething(Runnable runnable) { runnable.run(); }
diff --git a/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/PackageLocal.txt b/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/PackageLocal.txt
index c00a47cba5e..c9ca1f10ee0 100644
--- a/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/PackageLocal.txt
+++ b/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/PackageLocal.txt
@@ -1,5 +1,7 @@
 package
 
+internal fun foo(/*0*/ javaClass: JavaClass): kotlin.Unit
+
 public open class JavaClass {
     public constructor JavaClass()
     public/*package*/ open fun doSomething(/*0*/ runnable: java.lang.Runnable!): kotlin.Unit
diff --git a/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/Private.kt b/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/Private.kt
index 3ba01af925b..586b539be78 100644
--- a/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/Private.kt
+++ b/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/Private.kt
@@ -1,8 +1,4 @@
 // FILE: KotlinFile.kt
-package k
-
-import JavaClass
-
 fun foo(javaClass: JavaClass) {
     javaClass.<!INVISIBLE_MEMBER!>doSomething<!> <!TYPE_MISMATCH!>{ }<!>
 }
diff --git a/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/Private.txt b/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/Private.txt
index a4c3da552e9..fa58d3f008e 100644
--- a/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/Private.txt
+++ b/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/Private.txt
@@ -1,5 +1,7 @@
 package
 
+internal fun foo(/*0*/ javaClass: JavaClass): kotlin.Unit
+
 public open class JavaClass {
     public constructor JavaClass()
     private open fun doSomething(/*0*/ runnable: java.lang.Runnable!): kotlin.Unit
@@ -7,7 +9,3 @@ public open class JavaClass {
     public open override /*1*/ /*fake_override*/ fun hashCode(): kotlin.Int
     public open override /*1*/ /*fake_override*/ fun toString(): kotlin.String
 }
-
-package k {
-    internal fun foo(/*0*/ javaClass: JavaClass): kotlin.Unit
-}
diff --git a/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/ReturnTypeAnnotation.kt b/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/ReturnTypeAnnotation.kt
index 2181ef23087..e29804b9690 100644
--- a/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/ReturnTypeAnnotation.kt
+++ b/compiler/testData/diagnostics/tests/syntheticExtensions/samAdapters/ReturnTypeAnnotation.kt
@@ -1,7 +1,6 @@
 // FILE: KotlinFile.kt
 fun foo(javaInterface: JavaInterface) {
-    val value: String?
-    value = javaInterface.compute { "" }
+    val value = javaInterface.compute { "" }
     value<!UNSAFE_CALL!>.<!>length()
 }
 
diff --git a/compiler/tests/org/jetbrains/kotlin/checkers/JetDiagnosticsTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/checkers/JetDiagnosticsTestGenerated.java
index ab441504050..73539995bae 100644
--- a/compiler/tests/org/jetbrains/kotlin/checkers/JetDiagnosticsTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/checkers/JetDiagnosticsTestGenerated.java
@@ -8382,6 +8382,12 @@ public class JetDiagnosticsTestGenerated extends AbstractJetDiagnosticsTest {
                 doTest(fileName);
             }
 
+            @TestMetadata("canDeclareIfSamAdapterIsInherited.kt")
+            public void testCanDeclareIfSamAdapterIsInherited() throws Exception {
+                String fileName = JetTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/j+k/canDeclareIfSamAdapterIsInherited.kt");
+                doTest(fileName);
+            }
+
             @TestMetadata("computeIfAbsentConcurrent.kt")
             public void testComputeIfAbsentConcurrent() throws Exception {
                 String fileName = JetTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/j+k/computeIfAbsentConcurrent.kt");