--- a/src/jdk.compiler/share/classes/com/sun/tools/javac/main/JavaCompiler.java	Mon Oct 21 15:38:47 2019 +0530
+++ b/src/jdk.compiler/share/classes/com/sun/tools/javac/main/JavaCompiler.java	Tue Oct 22 12:39:55 2019 +0530
@@ -1478,31 +1478,37 @@
             protected boolean inMethod;
             @Override
             public void visitClassDef(JCClassDecl node) {
-                Type st = types.supertype(node.sym.type);
-                boolean envForSuperTypeFound = false;
-                while (!envForSuperTypeFound && st.hasTag(CLASS)) {
-                    ClassSymbol c = st.tsym.outermostClass();
-                    Env<AttrContext> stEnv = enter.getEnv(c);
-                    if (stEnv != null && env != stEnv) {
-                        if (dependencies.add(stEnv)) {
-                            boolean prevHasLambdas = needsLambdaToMethod;
-                            try {
-                                scan(stEnv.tree);
-                            } finally {
-                                /*
-                                 * ignore any updates to needsLambdaToMethod made during
-                                 * the nested scan, this ensures an initalized
-                                 * LambdaToMethod is available only to those
-                                 * classes that contain lambdas
-                                 */
-                                needsLambdaToMethod = prevHasLambdas;
+                boolean prevInMethod = inMethod;
+                inMethod = false;
+                try {
+                    Type st = types.supertype(node.sym.type);
+                    boolean envForSuperTypeFound = false;
+                    while (!envForSuperTypeFound && st.hasTag(CLASS)) {
+                        ClassSymbol c = st.tsym.outermostClass();
+                        Env<AttrContext> stEnv = enter.getEnv(c);
+                        if (stEnv != null && env != stEnv) {
+                            if (dependencies.add(stEnv)) {
+                                boolean prevNeedsLambdaToMethod = needsLambdaToMethod;
+                                try {
+                                    scan(stEnv.tree);
+                                } finally {
+                                    /*
+                                     * ignore any updates to needsLambdaToMethod made during
+                                     * the nested scan, this ensures an initalized
+                                     * LambdaToMethod is available only to those
+                                     * classes that contain lambdas
+                                     */
+                                    needsLambdaToMethod = prevNeedsLambdaToMethod;
+                                }
                             }
+                            envForSuperTypeFound = true;
                         }
-                        envForSuperTypeFound = true;
+                        st = types.supertype(st);
                     }
-                    st = types.supertype(st);
+                    super.visitClassDef(node);
+                } finally {
+                    inMethod = prevInMethod;
                 }
-                super.visitClassDef(node);
             }
             @Override
             public void visitLambda(JCLambda tree) {
@@ -1578,6 +1584,9 @@
                 if (shouldStop(CompileState.UNLAMBDA))
                     return;
 
+                if (verboseCompilePolicy)
+                    printNote("[LambdaToMethod " + env.enclClass.sym + "]");
+
                 env.tree = LambdaToMethod.instance(context).translateTopLevelClass(env, env.tree, localMake);
                 compileStates.put(env, CompileState.UNLAMBDA);
             }

--- /dev/null	Thu Jan 01 00:00:00 1970 +0000
+++ b/test/langtools/tools/javac/policy/test2/LocalMethodsL2MTest.java	Tue Oct 22 12:39:55 2019 +0530
@@ -0,0 +1,39 @@
+/*
+ * Copyright (c) 2019, Oracle and/or its affiliates. All rights reserved.
+ * DO NOT ALTER OR REMOVE COPYRIGHT NOTICES OR THIS FILE HEADER.
+ *
+ * This code is free software; you can redistribute it and/or modify it
+ * under the terms of the GNU General Public License version 2 only, as
+ * published by the Free Software Foundation.
+ *
+ * This code is distributed in the hope that it will be useful, but WITHOUT
+ * ANY WARRANTY; without even the implied warranty of MERCHANTABILITY or
+ * FITNESS FOR A PARTICULAR PURPOSE.  See the GNU General Public License
+ * version 2 for more details (a copy is included in the LICENSE file that
+ * accompanied this code).
+ *
+ * You should have received a copy of the GNU General Public License version
+ * 2 along with this work; if not, write to the Free Software Foundation,
+ * Inc., 51 Franklin St, Fifth Floor, Boston, MA 02110-1301 USA.
+ *
+ * Please contact Oracle, 500 Oracle Parkway, Redwood Shores, CA 94065 USA
+ * or visit www.oracle.com if you need additional information or have any
+ * questions.
+ */
+
+/*
+ * @test
+ * @bug 8232763
+ * @summary Javac may invoke LambdaToMethod needlessly
+ * @compile/ref=LocalMethodsL2MTest.out -XDverboseCompilePolicy LocalMethodsL2MTest.java
+ */
+
+public class LocalMethodsL2MTest {
+    public void foo() {
+        class Inner {
+            void goo() {
+                void zoo() {}
+            }
+        }
+    }
+}

--- /dev/null	Thu Jan 01 00:00:00 1970 +0000
+++ b/test/langtools/tools/javac/policy/test2/LocalMethodsL2MTest.out	Tue Oct 22 12:39:55 2019 +0530
@@ -0,0 +1,6 @@
+[attribute LocalMethodsL2MTest]
+[flow LocalMethodsL2MTest]
+[desugar LocalMethodsL2MTest]
+[LambdaToMethod LocalMethodsL2MTest]
+[generate code Inner]
+[generate code LocalMethodsL2MTest]

--- /dev/null	Thu Jan 01 00:00:00 1970 +0000
+++ b/test/langtools/tools/javac/policy/test2/LocalMethodsNoL2MTest.java	Tue Oct 22 12:39:55 2019 +0530
@@ -0,0 +1,38 @@
+/*
+ * Copyright (c) 2019, Oracle and/or its affiliates. All rights reserved.
+ * DO NOT ALTER OR REMOVE COPYRIGHT NOTICES OR THIS FILE HEADER.
+ *
+ * This code is free software; you can redistribute it and/or modify it
+ * under the terms of the GNU General Public License version 2 only, as
+ * published by the Free Software Foundation.
+ *
+ * This code is distributed in the hope that it will be useful, but WITHOUT
+ * ANY WARRANTY; without even the implied warranty of MERCHANTABILITY or
+ * FITNESS FOR A PARTICULAR PURPOSE.  See the GNU General Public License
+ * version 2 for more details (a copy is included in the LICENSE file that
+ * accompanied this code).
+ *
+ * You should have received a copy of the GNU General Public License version
+ * 2 along with this work; if not, write to the Free Software Foundation,
+ * Inc., 51 Franklin St, Fifth Floor, Boston, MA 02110-1301 USA.
+ *
+ * Please contact Oracle, 500 Oracle Parkway, Redwood Shores, CA 94065 USA
+ * or visit www.oracle.com if you need additional information or have any
+ * questions.
+ */
+
+/*
+ * @test
+ * @bug 8232763
+ * @summary  Javac may invoke LambdaToMethod needlessly
+ * @compile/ref=LocalMethodsNoL2MTest.out -XDverboseCompilePolicy LocalMethodsNoL2MTest.java
+ */
+
+public class LocalMethodsNoL2MTest {
+    public void foo() {
+        class Inner {
+            void goo() {
+            }
+        }
+    }
+}

--- /dev/null	Thu Jan 01 00:00:00 1970 +0000
+++ b/test/langtools/tools/javac/policy/test2/LocalMethodsNoL2MTest.out	Tue Oct 22 12:39:55 2019 +0530
@@ -0,0 +1,5 @@
+[attribute LocalMethodsNoL2MTest]
+[flow LocalMethodsNoL2MTest]
+[desugar LocalMethodsNoL2MTest]
+[generate code Inner]
+[generate code LocalMethodsNoL2MTest]