diff --git a/idea/src/org/jetbrains/kotlin/idea/codeInliner/CodeInliner.kt b/idea/src/org/jetbrains/kotlin/idea/codeInliner/CodeInliner.kt
index 3a030708c55..ac9eb4d2bb8 100644
--- a/idea/src/org/jetbrains/kotlin/idea/codeInliner/CodeInliner.kt
+++ b/idea/src/org/jetbrains/kotlin/idea/codeInliner/CodeInliner.kt
@@ -81,6 +81,7 @@ class CodeInliner<TCallElement : KtElement>(
             && elementToBeReplaced is KtExpression
             && !elementToBeReplaced.isUsedAsExpression(bindingContext)
             && !codeToInline.mainExpression.shouldKeepValue(usageCount = 0)
+            && elementToBeReplaced.getStrictParentOfType<KtAnnotationEntry>() == null
         ) {
             codeToInline.mainExpression = null
         }
diff --git a/idea/testData/refactoring/inline/inlineVariableOrProperty/InAnnotation.kt b/idea/testData/refactoring/inline/inlineVariableOrProperty/InAnnotation.kt
index 8ee9304aa7f..0ed23dbef9f 100644
--- a/idea/testData/refactoring/inline/inlineVariableOrProperty/InAnnotation.kt
+++ b/idea/testData/refactoring/inline/inlineVariableOrProperty/InAnnotation.kt
@@ -21,5 +21,5 @@ annotation class ExprAnn(val value: String)
 val inProperty = TAG
 
 fun foo() {
-    val x = @ExprAnn(TAG) inProperty
+    @InAnn("Local $TAG") val x = @ExprAnn(TAG) inProperty
 }
\ No newline at end of file
diff --git a/idea/testData/refactoring/inline/inlineVariableOrProperty/InAnnotation.kt.after b/idea/testData/refactoring/inline/inlineVariableOrProperty/InAnnotation.kt.after
index 2ee4102b508..940f1861d70 100644
--- a/idea/testData/refactoring/inline/inlineVariableOrProperty/InAnnotation.kt.after
+++ b/idea/testData/refactoring/inline/inlineVariableOrProperty/InAnnotation.kt.after
@@ -10,7 +10,7 @@ annotation class InAnn(val value: String)
 
 @InAnn("This is also Tagged") fun bar() {}
 
-fun baz(@InAnn("This is ${} too") x: Int) {}
+fun baz(@InAnn("This is Tagged too") x: Int) {}
 
 @Target(AnnotationTarget.EXPRESSION)
 @Retention(AnnotationRetention.SOURCE)
@@ -19,5 +19,5 @@ annotation class ExprAnn(val value: String)
 val inProperty = "Tagged"
 
 fun foo() {
-    val x = @ExprAnn() inProperty
+    @InAnn("Local Tagged") val x = @ExprAnn("Tagged") inProperty
 }
\ No newline at end of file