diff --git a/compiler/frontend/src/org/jetbrains/kotlin/types/expressions/ExpressionTypingServices.java b/compiler/frontend/src/org/jetbrains/kotlin/types/expressions/ExpressionTypingServices.java
index 1ebf5e950c3..8c9a88a245a 100644
--- a/compiler/frontend/src/org/jetbrains/kotlin/types/expressions/ExpressionTypingServices.java
+++ b/compiler/frontend/src/org/jetbrains/kotlin/types/expressions/ExpressionTypingServices.java
@@ -294,9 +294,10 @@ public class ExpressionTypingServices {
                 }
             }
             if (mightBeUnit) {
-                // ExpressionTypingVisitorForStatements should return only null or Unit for declarations and assignments
+                // ExpressionTypingVisitorForStatements should return only null or Unit for declarations and assignments,
+                // but (for correct assignment / initialization analysis) data flow info must be preserved
                 assert result.getType() == null || KotlinBuiltIns.isUnit(result.getType());
-                result = result.replaceType(expressionTypingComponents.builtIns.getUnitType()).replaceDataFlowInfo(context.dataFlowInfo);
+                result = result.replaceType(expressionTypingComponents.builtIns.getUnitType());
             }
         }
         return result;
diff --git a/compiler/testData/diagnostics/tests/smartCasts/variables/kt7599.kt b/compiler/testData/diagnostics/tests/smartCasts/variables/kt7599.kt
new file mode 100644
index 00000000000..429a34e22c4
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/smartCasts/variables/kt7599.kt
@@ -0,0 +1,23 @@
+trait A {
+    fun ok(): Boolean
+}
+
+class B: A {
+    override fun ok(): Boolean { return true }
+}
+
+class C: A {
+    override fun ok(): Boolean { return false }
+}
+
+fun foo(): Boolean {
+    var v: A
+    v = B()
+    // No smart cast needed, but not a problem if ever
+    if (<!DEBUG_INFO_SMARTCAST!>v<!>.ok()) {
+        v = C()
+    }
+    // No smart cast needed, and no smart cast possible!
+    // We cannot choose between B and C
+    return v.ok()
+}
\ No newline at end of file
diff --git a/compiler/testData/diagnostics/tests/smartCasts/variables/kt7599.txt b/compiler/testData/diagnostics/tests/smartCasts/variables/kt7599.txt
new file mode 100644
index 00000000000..31db881b731
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/smartCasts/variables/kt7599.txt
@@ -0,0 +1,26 @@
+package
+
+internal fun foo(): kotlin.Boolean
+
+internal trait A {
+    public open override /*1*/ /*fake_override*/ fun equals(/*0*/ other: kotlin.Any?): kotlin.Boolean
+    public open override /*1*/ /*fake_override*/ fun hashCode(): kotlin.Int
+    internal abstract fun ok(): kotlin.Boolean
+    public open override /*1*/ /*fake_override*/ fun toString(): kotlin.String
+}
+
+internal final class B : A {
+    public constructor B()
+    public open override /*1*/ /*fake_override*/ fun equals(/*0*/ other: kotlin.Any?): kotlin.Boolean
+    public open override /*1*/ /*fake_override*/ fun hashCode(): kotlin.Int
+    internal open override /*1*/ fun ok(): kotlin.Boolean
+    public open override /*1*/ /*fake_override*/ fun toString(): kotlin.String
+}
+
+internal final class C : A {
+    public constructor C()
+    public open override /*1*/ /*fake_override*/ fun equals(/*0*/ other: kotlin.Any?): kotlin.Boolean
+    public open override /*1*/ /*fake_override*/ fun hashCode(): kotlin.Int
+    internal open override /*1*/ fun ok(): kotlin.Boolean
+    public open override /*1*/ /*fake_override*/ fun toString(): kotlin.String
+}
diff --git a/compiler/tests/org/jetbrains/kotlin/checkers/JetDiagnosticsTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/checkers/JetDiagnosticsTestGenerated.java
index ebedb8470d4..f09cca0be9e 100644
--- a/compiler/tests/org/jetbrains/kotlin/checkers/JetDiagnosticsTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/checkers/JetDiagnosticsTestGenerated.java
@@ -11672,6 +11672,12 @@ public class JetDiagnosticsTestGenerated extends AbstractJetDiagnosticsTest {
                     doTest(fileName);
                 }
 
+                @TestMetadata("kt7599.kt")
+                public void testKt7599() throws Exception {
+                    String fileName = JetTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/smartCasts/variables/kt7599.kt");
+                    doTest(fileName);
+                }
+
                 @TestMetadata("property.kt")
                 public void testProperty() throws Exception {
                     String fileName = JetTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/smartCasts/variables/property.kt");