diff --git a/analysis/analysis-api-fir/src/org/jetbrains/kotlin/analysis/api/fir/KtSymbolByFirBuilder.kt b/analysis/analysis-api-fir/src/org/jetbrains/kotlin/analysis/api/fir/KtSymbolByFirBuilder.kt
index ce881bb366a..3fba3831f7f 100644
--- a/analysis/analysis-api-fir/src/org/jetbrains/kotlin/analysis/api/fir/KtSymbolByFirBuilder.kt
+++ b/analysis/analysis-api-fir/src/org/jetbrains/kotlin/analysis/api/fir/KtSymbolByFirBuilder.kt
@@ -461,8 +461,7 @@ internal class KtSymbolByFirBuilder constructor(
                     // TODO this is a temporary hack to prevent FIR IDE from crashing on builder inference, see KT-50916
                     val typeVariable = coneType.constructor.variable as? ConeTypeParameterBasedTypeVariable
                     val typeParameterSymbol = typeVariable?.typeParameterSymbol ?: throwUnexpectedElementError(coneType)
-                    val coneTypeParameterType = (typeParameterSymbol.toConeType() as ConeTypeParameterType)
-                        .withNullability(coneType.nullability, rootSession.typeContext)
+                    val coneTypeParameterType = typeParameterSymbol.toConeType(coneType.nullability.isNullable)
 
                     KtFirTypeParameterType(coneTypeParameterType, this@KtSymbolByFirBuilder)
                 }
diff --git a/analysis/analysis-api-fir/src/org/jetbrains/kotlin/analysis/api/fir/diagnostics/KtFirDataClassConverters.kt b/analysis/analysis-api-fir/src/org/jetbrains/kotlin/analysis/api/fir/diagnostics/KtFirDataClassConverters.kt
index 58fac26718d..f8fcd913929 100644
--- a/analysis/analysis-api-fir/src/org/jetbrains/kotlin/analysis/api/fir/diagnostics/KtFirDataClassConverters.kt
+++ b/analysis/analysis-api-fir/src/org/jetbrains/kotlin/analysis/api/fir/diagnostics/KtFirDataClassConverters.kt
@@ -2427,6 +2427,21 @@ internal val KT_DIAGNOSTIC_CONVERTER = KtDiagnosticConverterBuilder.buildConvert
             token,
         )
     }
+    add(FirErrors.EXPANSIVE_INHERITANCE) { firDiagnostic ->
+        ExpansiveInheritanceImpl(
+            firDiagnostic as KtPsiDiagnostic,
+            token,
+        )
+    }
+    add(FirErrors.EXPANSIVE_INHERITANCE_IN_JAVA) { firDiagnostic ->
+        ExpansiveInheritanceInJavaImpl(
+            firDiagnostic.a.map { firBasedSymbol ->
+                firSymbolBuilder.buildSymbol(firBasedSymbol)
+            },
+            firDiagnostic as KtPsiDiagnostic,
+            token,
+        )
+    }
     add(FirErrors.DEPRECATED_TYPE_PARAMETER_SYNTAX) { firDiagnostic ->
         DeprecatedTypeParameterSyntaxImpl(
             firDiagnostic as KtPsiDiagnostic,
diff --git a/analysis/analysis-api-fir/src/org/jetbrains/kotlin/analysis/api/fir/diagnostics/KtFirDiagnostics.kt b/analysis/analysis-api-fir/src/org/jetbrains/kotlin/analysis/api/fir/diagnostics/KtFirDiagnostics.kt
index ee62fc9ecd4..00e755a81cf 100644
--- a/analysis/analysis-api-fir/src/org/jetbrains/kotlin/analysis/api/fir/diagnostics/KtFirDiagnostics.kt
+++ b/analysis/analysis-api-fir/src/org/jetbrains/kotlin/analysis/api/fir/diagnostics/KtFirDiagnostics.kt
@@ -1723,6 +1723,15 @@ sealed interface KtFirDiagnostic<PSI : PsiElement> : KtDiagnosticWithPsi<PSI> {
         val containingTypes: List<KtSymbol>
     }
 
+    interface ExpansiveInheritance : KtFirDiagnostic<PsiElement> {
+        override val diagnosticClass get() = ExpansiveInheritance::class
+    }
+
+    interface ExpansiveInheritanceInJava : KtFirDiagnostic<PsiElement> {
+        override val diagnosticClass get() = ExpansiveInheritanceInJava::class
+        val containingTypes: List<KtSymbol>
+    }
+
     interface DeprecatedTypeParameterSyntax : KtFirDiagnostic<KtDeclaration> {
         override val diagnosticClass get() = DeprecatedTypeParameterSyntax::class
     }
diff --git a/analysis/analysis-api-fir/src/org/jetbrains/kotlin/analysis/api/fir/diagnostics/KtFirDiagnosticsImpl.kt b/analysis/analysis-api-fir/src/org/jetbrains/kotlin/analysis/api/fir/diagnostics/KtFirDiagnosticsImpl.kt
index b978d01b71b..01023c8613d 100644
--- a/analysis/analysis-api-fir/src/org/jetbrains/kotlin/analysis/api/fir/diagnostics/KtFirDiagnosticsImpl.kt
+++ b/analysis/analysis-api-fir/src/org/jetbrains/kotlin/analysis/api/fir/diagnostics/KtFirDiagnosticsImpl.kt
@@ -2072,6 +2072,17 @@ internal class FiniteBoundsViolationInJavaImpl(
     token: KtLifetimeToken,
 ) : KtAbstractFirDiagnostic<PsiElement>(firDiagnostic, token), KtFirDiagnostic.FiniteBoundsViolationInJava
 
+internal class ExpansiveInheritanceImpl(
+    firDiagnostic: KtPsiDiagnostic,
+    token: KtLifetimeToken,
+) : KtAbstractFirDiagnostic<PsiElement>(firDiagnostic, token), KtFirDiagnostic.ExpansiveInheritance
+
+internal class ExpansiveInheritanceInJavaImpl(
+    override val containingTypes: List<KtSymbol>,
+    firDiagnostic: KtPsiDiagnostic,
+    token: KtLifetimeToken,
+) : KtAbstractFirDiagnostic<PsiElement>(firDiagnostic, token), KtFirDiagnostic.ExpansiveInheritanceInJava
+
 internal class DeprecatedTypeParameterSyntaxImpl(
     firDiagnostic: KtPsiDiagnostic,
     token: KtLifetimeToken,
diff --git a/compiler/fir/checkers/checkers-component-generator/src/org/jetbrains/kotlin/fir/checkers/generator/diagnostics/FirDiagnosticsList.kt b/compiler/fir/checkers/checkers-component-generator/src/org/jetbrains/kotlin/fir/checkers/generator/diagnostics/FirDiagnosticsList.kt
index 1d840aaccb7..9c37d4aada0 100644
--- a/compiler/fir/checkers/checkers-component-generator/src/org/jetbrains/kotlin/fir/checkers/generator/diagnostics/FirDiagnosticsList.kt
+++ b/compiler/fir/checkers/checkers-component-generator/src/org/jetbrains/kotlin/fir/checkers/generator/diagnostics/FirDiagnosticsList.kt
@@ -792,7 +792,11 @@ object DIAGNOSTICS_LIST : DiagnosticList("FirErrors") {
         val CYCLIC_GENERIC_UPPER_BOUND by error<PsiElement>()
 
         val FINITE_BOUNDS_VIOLATION by error<PsiElement>()
-        val FINITE_BOUNDS_VIOLATION_IN_JAVA by error<PsiElement> {
+        val FINITE_BOUNDS_VIOLATION_IN_JAVA by warning<PsiElement> {
+            parameter<List<Symbol>>("containingTypes")
+        }
+        val EXPANSIVE_INHERITANCE by error<PsiElement>()
+        val EXPANSIVE_INHERITANCE_IN_JAVA by warning<PsiElement> {
             parameter<List<Symbol>>("containingTypes")
         }
 
diff --git a/compiler/fir/checkers/gen/org/jetbrains/kotlin/fir/analysis/diagnostics/FirErrors.kt b/compiler/fir/checkers/gen/org/jetbrains/kotlin/fir/analysis/diagnostics/FirErrors.kt
index d76ddfb8dd0..43f88bbf72c 100644
--- a/compiler/fir/checkers/gen/org/jetbrains/kotlin/fir/analysis/diagnostics/FirErrors.kt
+++ b/compiler/fir/checkers/gen/org/jetbrains/kotlin/fir/analysis/diagnostics/FirErrors.kt
@@ -467,7 +467,9 @@ object FirErrors {
     val ABBREVIATED_NOTHING_PROPERTY_TYPE by error0<PsiElement>(SourceElementPositioningStrategies.NAME_IDENTIFIER)
     val CYCLIC_GENERIC_UPPER_BOUND by error0<PsiElement>()
     val FINITE_BOUNDS_VIOLATION by error0<PsiElement>()
-    val FINITE_BOUNDS_VIOLATION_IN_JAVA by error1<PsiElement, List<FirBasedSymbol<*>>>()
+    val FINITE_BOUNDS_VIOLATION_IN_JAVA by warning1<PsiElement, List<FirBasedSymbol<*>>>()
+    val EXPANSIVE_INHERITANCE by error0<PsiElement>()
+    val EXPANSIVE_INHERITANCE_IN_JAVA by warning1<PsiElement, List<FirBasedSymbol<*>>>()
     val DEPRECATED_TYPE_PARAMETER_SYNTAX by error0<KtDeclaration>(SourceElementPositioningStrategies.TYPE_PARAMETERS_LIST)
     val MISPLACED_TYPE_PARAMETER_CONSTRAINTS by warning0<KtTypeParameter>()
     val DYNAMIC_SUPERTYPE by error0<KtTypeReference>()
diff --git a/compiler/fir/checkers/gen/org/jetbrains/kotlin/fir/analysis/diagnostics/FirNonSuppressibleErrorNames.kt b/compiler/fir/checkers/gen/org/jetbrains/kotlin/fir/analysis/diagnostics/FirNonSuppressibleErrorNames.kt
index df7be91fa5f..927bbb02e49 100644
--- a/compiler/fir/checkers/gen/org/jetbrains/kotlin/fir/analysis/diagnostics/FirNonSuppressibleErrorNames.kt
+++ b/compiler/fir/checkers/gen/org/jetbrains/kotlin/fir/analysis/diagnostics/FirNonSuppressibleErrorNames.kt
@@ -305,7 +305,7 @@ val FIR_NON_SUPPRESSIBLE_ERROR_NAMES: Set<String> = setOf(
     "IMPLICIT_NOTHING_PROPERTY_TYPE",
     "CYCLIC_GENERIC_UPPER_BOUND",
     "FINITE_BOUNDS_VIOLATION",
-    "FINITE_BOUNDS_VIOLATION_IN_JAVA",
+    "EXPANSIVE_INHERITANCE",
     "DEPRECATED_TYPE_PARAMETER_SYNTAX",
     "DYNAMIC_SUPERTYPE",
     "DYNAMIC_UPPER_BOUND",
diff --git a/compiler/fir/checkers/src/org/jetbrains/kotlin/fir/analysis/checkers/CommonDeclarationCheckers.kt b/compiler/fir/checkers/src/org/jetbrains/kotlin/fir/analysis/checkers/CommonDeclarationCheckers.kt
index 3d02c7a5565..f6d9ab2985d 100644
--- a/compiler/fir/checkers/src/org/jetbrains/kotlin/fir/analysis/checkers/CommonDeclarationCheckers.kt
+++ b/compiler/fir/checkers/src/org/jetbrains/kotlin/fir/analysis/checkers/CommonDeclarationCheckers.kt
@@ -140,6 +140,7 @@ object CommonDeclarationCheckers : DeclarationCheckers() {
             FirDelegateFieldTypeMismatchChecker,
             FirMultipleDefaultsInheritedFromSupertypesChecker,
             FirFiniteBoundRestrictionChecker,
+            FirNonExpansiveInheritanceRestrictionChecker,
             FirDefaultArgumentsInExpectActualizedByFakeOverrideChecker,
         )
 
diff --git a/compiler/fir/checkers/src/org/jetbrains/kotlin/fir/analysis/checkers/declaration/FirNonExpansiveInheritanceRestrictionChecker.kt b/compiler/fir/checkers/src/org/jetbrains/kotlin/fir/analysis/checkers/declaration/FirNonExpansiveInheritanceRestrictionChecker.kt
new file mode 100644
index 00000000000..712eb27cfe6
--- /dev/null
+++ b/compiler/fir/checkers/src/org/jetbrains/kotlin/fir/analysis/checkers/declaration/FirNonExpansiveInheritanceRestrictionChecker.kt
@@ -0,0 +1,175 @@
+/*
+ * Copyright 2010-2023 JetBrains s.r.o. and Kotlin Programming Language contributors.
+ * Use of this source code is governed by the Apache 2.0 license that can be found in the license/LICENSE.txt file.
+ */
+
+package org.jetbrains.kotlin.fir.analysis.checkers.declaration
+
+import org.jetbrains.kotlin.diagnostics.DiagnosticReporter
+import org.jetbrains.kotlin.diagnostics.reportOn
+import org.jetbrains.kotlin.fir.FirSession
+import org.jetbrains.kotlin.fir.analysis.checkers.collectUpperBounds
+import org.jetbrains.kotlin.fir.analysis.checkers.context.CheckerContext
+import org.jetbrains.kotlin.fir.analysis.diagnostics.FirErrors
+import org.jetbrains.kotlin.fir.declarations.FirRegularClass
+import org.jetbrains.kotlin.fir.scopes.impl.toConeType
+import org.jetbrains.kotlin.fir.symbols.impl.FirClassifierSymbol
+import org.jetbrains.kotlin.fir.symbols.impl.FirRegularClassSymbol
+import org.jetbrains.kotlin.fir.symbols.impl.FirTypeParameterSymbol
+import org.jetbrains.kotlin.fir.types.*
+import org.jetbrains.kotlin.utils.DFS
+import org.jetbrains.kotlin.utils.SmartSet
+
+/**
+ * @see org.jetbrains.kotlin.resolve.NonExpansiveInheritanceRestrictionChecker
+ */
+object FirNonExpansiveInheritanceRestrictionChecker : FirRegularClassChecker() {
+    override fun check(declaration: FirRegularClass, context: CheckerContext, reporter: DiagnosticReporter) {
+        if (declaration.typeParameters.isEmpty()) return
+
+        val graph = buildTypeGraph(declaration, context.session)
+
+        val edgesInCycles = graph.expansiveEdges.filterTo(SmartSet.create()) { graph.isEdgeInCycle(it) }
+        if (edgesInCycles.isEmpty()) return
+
+        val problemNodes = edgesInCycles.flatMapTo(mutableSetOf()) { listOf(it.from, it.to) }
+
+        for (ref in declaration.typeParameters) {
+            if (problemNodes.remove(TypeParameterNode(declaration.symbol, ref.symbol))) {
+                reporter.reportOn(ref.source ?: declaration.source, FirErrors.EXPANSIVE_INHERITANCE, context)
+                return
+            }
+        }
+
+        if (problemNodes.any { it.typeParameter.source != null }) return
+
+        val containers = problemNodes.map { it.container }
+        reporter.reportOn(declaration.source, FirErrors.EXPANSIVE_INHERITANCE_IN_JAVA, containers, context)
+    }
+
+    private fun buildTypeGraph(
+        declaration: FirRegularClass,
+        session: FirSession,
+    ): Graph<TypeParameterNode> {
+        // K1 treats type parameters inherited within inner classes from outer classes as being
+        // from different classes. However, in K2, the symbol for these type parameters are the
+        // same. So we have to store the pair of class symbol and type parameter symbol, so we do
+        // not report errors on inherited type parameters from outer classes.
+        val graph = Graph<TypeParameterNode>()
+
+        fun addEdges(
+            typeParameters: List<FirTypeParameterSymbol>,
+            constituentTypes: Set<ConeKotlinType>,
+            symbol: FirRegularClassSymbol,
+            constituentTypeSymbol: FirRegularClassSymbol,
+            constituentTypeParameterSymbol: FirTypeParameterSymbol,
+            expansive: Boolean,
+        ) {
+            for (typeParameter in typeParameters) {
+                if (typeParameter.toConeType(isNullable = false) in constituentTypes ||
+                    typeParameter.toConeType(isNullable = true) in constituentTypes
+                ) {
+                    graph.addEdge(
+                        from = TypeParameterNode(symbol, typeParameter),
+                        to = TypeParameterNode(constituentTypeSymbol, constituentTypeParameterSymbol),
+                        expansive = expansive,
+                    )
+                }
+            }
+        }
+
+        val visitedSymbols = SmartSet.create<FirClassifierSymbol<*>>()
+        fun visit(symbol: FirRegularClassSymbol) {
+            val typeParameters = symbol.typeParameterSymbols
+
+            // For each type parameter T, let ST be the set of all constituent types of all immediate supertypes of the owner of T.
+            // If T appears as a constituent type of a simple type argument A in a generic type in ST, add an edge from T
+            // to U, where U is the type parameter corresponding to A. The edge is non-expansive if A has the form T or T?,
+            // the edge is expansive otherwise.
+            for (constituentType in symbol.resolvedSuperTypes.flatMap { it.constituentTypes() }) {
+                val constituentTypeSymbol = constituentType.toRegularClassSymbol(session) ?: continue
+                if (visitedSymbols.add(constituentTypeSymbol)) visit(constituentTypeSymbol)
+                if (constituentTypeSymbol.typeParameterSymbols.size != constituentType.typeArguments.size) continue
+
+                for ((i, typeProjection) in constituentType.typeArguments.withIndex()) {
+                    val constituentTypeParameterSymbol = constituentTypeSymbol.typeParameterSymbols[i]
+                    if (typeProjection.kind == ProjectionKind.INVARIANT) {
+                        val constituents = typeProjection.type!!.constituentTypes()
+
+                        addEdges(
+                            typeParameters = typeParameters,
+                            constituentTypes = constituents,
+                            symbol = symbol,
+                            constituentTypeSymbol = constituentTypeSymbol,
+                            constituentTypeParameterSymbol = constituentTypeParameterSymbol,
+                            expansive = typeProjection.type!!.unwrapLowerBound() !is ConeTypeParameterType,
+                        )
+                    } else {
+                        // Furthermore, if T appears as a constituent type of an element of the B-closure of the set of lower and
+                        // upper bounds of a skolem type variable Q in a skolemization of a projected generic type in ST, add an
+                        // expanding edge from T to V, where V is the type parameter corresponding to Q.
+                        val bounds = SmartSet.create<ConeKotlinType>()
+                        constituentTypeParameterSymbol.resolvedBounds.mapTo(bounds) { it.type }
+                        typeProjection.type?.let(bounds::add)
+                        val boundClosure = bounds.flatMapTo(SmartSet.create()) { it.collectUpperBounds() }
+
+                        addEdges(
+                            typeParameters = typeParameters,
+                            constituentTypes = boundClosure.flatMapTo(SmartSet.create()) { it.constituentTypes() },
+                            symbol = symbol,
+                            constituentTypeSymbol = constituentTypeSymbol,
+                            constituentTypeParameterSymbol = constituentTypeParameterSymbol,
+                            expansive = true,
+                        )
+                    }
+                }
+            }
+        }
+
+        visitedSymbols.add(declaration.symbol)
+        visit(declaration.symbol)
+
+        return graph
+    }
+
+    private data class TypeParameterNode(
+        val container: FirRegularClassSymbol,
+        val typeParameter: FirTypeParameterSymbol,
+    )
+
+    private data class ExpansiveEdge<out T>(val from: T, val to: T)
+
+    private class Graph<T> {
+        val expansiveEdges = SmartSet.create<ExpansiveEdge<T>>()
+        private val edgeLists = mutableMapOf<T, MutableSet<T>>()
+
+        fun addEdge(from: T, to: T, expansive: Boolean = false) {
+            edgeLists.getOrPut(from) { SmartSet.create() }.add(to)
+            if (expansive) {
+                expansiveEdges.add(ExpansiveEdge(from, to))
+            }
+        }
+
+        fun isEdgeInCycle(edge: ExpansiveEdge<T>) = edge.from in collectReachable(edge.to)
+
+        private fun collectReachable(from: T): List<T> {
+            val handler = object : DFS.NodeHandlerWithListResult<T, T>() {
+                override fun afterChildren(current: T?) {
+                    result.add(current)
+                }
+            }
+
+            val neighbors = DFS.Neighbors<T> { current -> edgeLists[current] ?: emptySet() }
+
+            DFS.dfs(listOf(from), neighbors, handler)
+
+            return handler.result()
+        }
+    }
+}
+
+private fun ConeKotlinType.constituentTypes(): Set<ConeKotlinType> {
+    val constituentTypes = SmartSet.create<ConeKotlinType>()
+    forEachType { constituentTypes.add(it) }
+    return constituentTypes
+}
diff --git a/compiler/fir/checkers/src/org/jetbrains/kotlin/fir/analysis/diagnostics/FirErrorsDefaultMessages.kt b/compiler/fir/checkers/src/org/jetbrains/kotlin/fir/analysis/diagnostics/FirErrorsDefaultMessages.kt
index 8b202c59d1a..b77b3c12e7d 100644
--- a/compiler/fir/checkers/src/org/jetbrains/kotlin/fir/analysis/diagnostics/FirErrorsDefaultMessages.kt
+++ b/compiler/fir/checkers/src/org/jetbrains/kotlin/fir/analysis/diagnostics/FirErrorsDefaultMessages.kt
@@ -218,6 +218,8 @@ import org.jetbrains.kotlin.fir.analysis.diagnostics.FirErrors.ERROR_FROM_JAVA_R
 import org.jetbrains.kotlin.fir.analysis.diagnostics.FirErrors.ERROR_IN_CONTRACT_DESCRIPTION
 import org.jetbrains.kotlin.fir.analysis.diagnostics.FirErrors.ERROR_SUPPRESSION
 import org.jetbrains.kotlin.fir.analysis.diagnostics.FirErrors.EXPANDED_TYPE_CANNOT_BE_INHERITED
+import org.jetbrains.kotlin.fir.analysis.diagnostics.FirErrors.EXPANSIVE_INHERITANCE
+import org.jetbrains.kotlin.fir.analysis.diagnostics.FirErrors.EXPANSIVE_INHERITANCE_IN_JAVA
 import org.jetbrains.kotlin.fir.analysis.diagnostics.FirErrors.EXPECTED_CLASS_CONSTRUCTOR_DELEGATION_CALL
 import org.jetbrains.kotlin.fir.analysis.diagnostics.FirErrors.EXPECTED_CLASS_CONSTRUCTOR_PROPERTY_PARAMETER
 import org.jetbrains.kotlin.fir.analysis.diagnostics.FirErrors.EXPECTED_CONDITION
@@ -1445,7 +1447,13 @@ object FirErrorsDefaultMessages : BaseDiagnosticRendererFactory() {
         map.put(CYCLIC_GENERIC_UPPER_BOUND, "Type parameter has cyclic upper bounds.")
 
         map.put(FINITE_BOUNDS_VIOLATION, "This type parameter violates the Finite Bound Restriction.")
-        map.put(FINITE_BOUNDS_VIOLATION_IN_JAVA, "Violation of Finite Bound Restriction for {0}", commaSeparated(DECLARATION_NAME))
+        map.put(FINITE_BOUNDS_VIOLATION_IN_JAVA, "Violation of Finite Bound Restriction for {0}.", commaSeparated(DECLARATION_NAME))
+        map.put(EXPANSIVE_INHERITANCE, "This type parameter violates the Non-Expansive Inheritance Restriction.")
+        map.put(
+            EXPANSIVE_INHERITANCE_IN_JAVA,
+            "Violation of Non-Expansive Inheritance Restriction for {0}.",
+            commaSeparated(DECLARATION_NAME),
+        )
 
         map.put(DEPRECATED_TYPE_PARAMETER_SYNTAX, "Type parameters must be placed before function name.")
 
diff --git a/compiler/fir/cones/src/org/jetbrains/kotlin/fir/types/ConeTypeUtils.kt b/compiler/fir/cones/src/org/jetbrains/kotlin/fir/types/ConeTypeUtils.kt
index 1e6af026066..57443160797 100644
--- a/compiler/fir/cones/src/org/jetbrains/kotlin/fir/types/ConeTypeUtils.kt
+++ b/compiler/fir/cones/src/org/jetbrains/kotlin/fir/types/ConeTypeUtils.kt
@@ -53,6 +53,14 @@ private fun ConeKotlinType.contains(predicate: (ConeKotlinType) -> Boolean, visi
 
 // ----------------------------------- Transformations -----------------------------------
 
+fun ConeKotlinType.unwrapLowerBound(): ConeSimpleKotlinType {
+    return when(this) {
+        is ConeDefinitelyNotNullType -> original.unwrapLowerBound()
+        is ConeFlexibleType -> lowerBound.unwrapLowerBound()
+        is ConeSimpleKotlinType -> this
+    }
+}
+
 fun ConeKotlinType.upperBoundIfFlexible(): ConeSimpleKotlinType {
     return when (this) {
         is ConeSimpleKotlinType -> this
diff --git a/compiler/fir/providers/src/org/jetbrains/kotlin/fir/scopes/impl/FirNestedClassifierScope.kt b/compiler/fir/providers/src/org/jetbrains/kotlin/fir/scopes/impl/FirNestedClassifierScope.kt
index 2e713500aa6..bb7f5fec7a5 100644
--- a/compiler/fir/providers/src/org/jetbrains/kotlin/fir/scopes/impl/FirNestedClassifierScope.kt
+++ b/compiler/fir/providers/src/org/jetbrains/kotlin/fir/scopes/impl/FirNestedClassifierScope.kt
@@ -18,7 +18,7 @@ import org.jetbrains.kotlin.fir.symbols.impl.FirClassLikeSymbol
 import org.jetbrains.kotlin.fir.symbols.impl.FirClassifierSymbol
 import org.jetbrains.kotlin.fir.symbols.impl.FirRegularClassSymbol
 import org.jetbrains.kotlin.fir.symbols.impl.FirTypeParameterSymbol
-import org.jetbrains.kotlin.fir.types.ConeKotlinType
+import org.jetbrains.kotlin.fir.types.ConeTypeParameterType
 import org.jetbrains.kotlin.fir.types.impl.ConeTypeParameterTypeImpl
 import org.jetbrains.kotlin.name.Name
 import org.jetbrains.kotlin.utils.addToStdlib.shouldNotBeCalled
@@ -91,6 +91,9 @@ class FirCompositeNestedClassifierScope(
     }
 }
 
-fun FirTypeParameterRef.toConeType(): ConeKotlinType = symbol.toConeType()
+fun FirTypeParameterRef.toConeType(): ConeTypeParameterType = symbol.toConeType()
 
-fun FirTypeParameterSymbol.toConeType(): ConeKotlinType = ConeTypeParameterTypeImpl(ConeTypeParameterLookupTag(this), isNullable = false)
+fun FirTypeParameterSymbol.toConeType(): ConeTypeParameterType = toConeType(false)
+
+fun FirTypeParameterSymbol.toConeType(isNullable: Boolean): ConeTypeParameterType =
+    ConeTypeParameterTypeImpl(ConeTypeParameterLookupTag(this), isNullable)
diff --git a/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/JavaWithKotlin.fir.kt b/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/JavaWithKotlin.fir.kt
deleted file mode 100644
index b0de7ed12c4..00000000000
--- a/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/JavaWithKotlin.fir.kt
+++ /dev/null
@@ -1,14 +0,0 @@
-// !DIAGNOSTICS: -UPPER_BOUND_VIOLATED
-
-// FILE: D.java
-public interface D<W> {}
-
-// FILE: Q.java
-public interface Q<Z1, Z2> {}
-
-// FILE: C.java
-public interface C<X> extends D<P<X,X>> {}
-
-// FILE: 1.kt
-interface P<Y1, Y2> : Q<C<Y1>, C<D<Y2>>>
-
diff --git a/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/JavaWithKotlin.kt b/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/JavaWithKotlin.kt
index ae3d83acd23..4eb59825422 100644
--- a/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/JavaWithKotlin.kt
+++ b/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/JavaWithKotlin.kt
@@ -1,3 +1,4 @@
+// FIR_IDENTICAL
 // !DIAGNOSTICS: -UPPER_BOUND_VIOLATED
 
 // FILE: D.java
diff --git a/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/JavaWithKotlin2.fir.kt b/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/JavaWithKotlin2.fir.kt
deleted file mode 100644
index df74bc5ac09..00000000000
--- a/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/JavaWithKotlin2.fir.kt
+++ /dev/null
@@ -1,16 +0,0 @@
-// !DIAGNOSTICS: -UPPER_BOUND_VIOLATED
-
-// FILE: D.java
-public interface D<W> {}
-
-// FILE: Q.java
-public interface Q<Z1, Z2> {}
-
-// FILE: C.java
-public interface C<X> extends D<P<X,X>> {}
-
-// FILE: P.java
-public interface P<Y1, Y2> extends Q<C<Y1>, C<D<Y2>>> {}
-
-// FILE: 1.kt
-interface P1<YY1, YY2> : P<YY1, YY2>
diff --git a/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/JavaWithKotlin2.kt b/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/JavaWithKotlin2.kt
index 3fd3aba4f5b..c083402d5a6 100644
--- a/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/JavaWithKotlin2.kt
+++ b/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/JavaWithKotlin2.kt
@@ -1,3 +1,4 @@
+// FIR_IDENTICAL
 // !DIAGNOSTICS: -UPPER_BOUND_VIOLATED
 
 // FILE: D.java
diff --git a/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/PureKotlin.fir.kt b/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/PureKotlin.fir.kt
deleted file mode 100644
index 378bbb5bd72..00000000000
--- a/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/PureKotlin.fir.kt
+++ /dev/null
@@ -1,28 +0,0 @@
-// !DIAGNOSTICS: -UPPER_BOUND_VIOLATED
-
-interface A<T>
-interface B<T> : A<A<*>>
-
-interface N0<in T>
-interface C0<X> : N0<N0<C0<C0<X>>>>
-
-interface N1<in T>
-interface C1<X> : N1<N1<C1<C1<X?>>>>
-interface C2<T> : C1<C1<T>>
-
-interface C<X> : D<P<X, X>>
-interface P<Y1, Y2> : Q<C<Y1>, C<D<Y2>>>
-interface Q<Z1, Z2>
-interface D<W>
-
-interface E0<T>
-interface E1<T : E2>
-interface E2 : E0<E1<out E2>>
-
-interface F0<T>
-interface F1<T : F2<*>, U : F2<*>>
-interface F2<T> : F0<F1<out F2<*>, T>>
-
-interface G0<T>
-interface G1<T : U, U : G2<*>>
-interface G2<T> : G0<G1<out G2<*>, T>>
\ No newline at end of file
diff --git a/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/PureKotlin.kt b/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/PureKotlin.kt
index 0f06efabcf3..16e6d1ebfdf 100644
--- a/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/PureKotlin.kt
+++ b/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/PureKotlin.kt
@@ -1,3 +1,4 @@
+// FIR_IDENTICAL
 // !DIAGNOSTICS: -UPPER_BOUND_VIOLATED
 
 interface A<T>
@@ -25,4 +26,8 @@ interface F2<T> : F0<F1<out F2<*>, T>>
 
 interface G0<T>
 interface G1<T : U, U : G2<*>>
-interface G2<T> : G0<G1<out G2<*>, T>>
\ No newline at end of file
+interface G2<T> : G0<G1<out G2<*>, T>>
+
+abstract class H0<X> {
+    inner abstract class H1<Y> : H0<H1<Y>>() // Outer(X) should not be reported as non-expansive
+}
diff --git a/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/PureKotlin.txt b/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/PureKotlin.txt
index 5d416b0e778..4123d478d96 100644
--- a/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/PureKotlin.txt
+++ b/compiler/testData/diagnostics/tests/declarationChecks/nonExpansiveInheritanceRestriction/PureKotlin.txt
@@ -96,6 +96,20 @@ public interface G2</*0*/ T> : G0<G1<out G2<*>, T>> {
     public open override /*1*/ /*fake_override*/ fun toString(): kotlin.String
 }
 
+public abstract class H0</*0*/ X> {
+    public constructor H0</*0*/ X>()
+    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
+
+    public abstract inner class H1</*0*/ Y> /*captured type parameters: /*1*/ X*/ : H0<H0<X>.H1<Y>> {
+        public constructor H1</*0*/ Y>()
+        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
+    }
+}
+
 public interface N0</*0*/ in 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