The issue is the type checker doesn't consider P? a subtype of
CapturedType<in P>?, whereas P a subtype of CapturedType<in P>?. In
AbstractTypeCheckerContext::checkSubtypeForSpecialCases, it checks if
P? is a subtype of the lower type of the captured type, which is
P, and returns false.
This fix uses nullable version of the lower type when the captured
type is marked nullable. To check if P? is a subtype of Captured<in
P>?, we check the LHS, P?, against the nullable lower type of RHS,
P?.
^KT-42825 Fixed
Mikhail Glukhikh