diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index 3774bccd78e..1360a884bc9 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -28086,7 +28086,9 @@ export function createTypeChecker(host: TypeCheckerHost): TypeChecker {
             case SyntaxKind.Identifier:
                 if (!isThisInTypeQuery(node)) {
                     const symbol = getResolvedSymbol(node as Identifier);
-                    return isConstantVariable(symbol) || isParameterOrMutableLocalVariable(symbol) && !isSymbolAssigned(symbol);
+                    return isConstantVariable(symbol)
+                        || isParameterOrMutableLocalVariable(symbol) && !isSymbolAssigned(symbol)
+                        || !!symbol.valueDeclaration && isFunctionExpression(symbol.valueDeclaration);
                 }
                 break;
             case SyntaxKind.PropertyAccessExpression:
@@ -37796,7 +37798,8 @@ export function createTypeChecker(host: TypeCheckerHost): TypeChecker {
                 if (
                     expr.kind === SyntaxKind.CallExpression &&
                     (expr as CallExpression).expression.kind === SyntaxKind.Identifier &&
-                    checkExpressionCached((expr as CallExpression).expression).symbol === func.symbol
+                    checkExpressionCached((expr as CallExpression).expression).symbol === getMergedSymbol(func.symbol) &&
+                    (!isFunctionExpressionOrArrowFunction(func.symbol.valueDeclaration!) || isConstantReference((expr as CallExpression).expression))
                 ) {
                     hasReturnOfTypeNever = true;
                     return;
diff --git a/tests/baselines/reference/implicitAnyFromCircularInference.errors.txt b/tests/baselines/reference/implicitAnyFromCircularInference.errors.txt
index dd2f4cc3af5..29986db55f3 100644
--- a/tests/baselines/reference/implicitAnyFromCircularInference.errors.txt
+++ b/tests/baselines/reference/implicitAnyFromCircularInference.errors.txt
@@ -2,13 +2,14 @@ implicitAnyFromCircularInference.ts(2,5): error TS2502: 'a' is referenced direct
 implicitAnyFromCircularInference.ts(5,5): error TS2502: 'b' is referenced directly or indirectly in its own type annotation.
 implicitAnyFromCircularInference.ts(6,5): error TS2502: 'c' is referenced directly or indirectly in its own type annotation.
 implicitAnyFromCircularInference.ts(9,5): error TS2502: 'd' is referenced directly or indirectly in its own type annotation.
+implicitAnyFromCircularInference.ts(17,5): error TS7023: 'f1' implicitly has return type 'any' because it does not have a return type annotation and is referenced directly or indirectly in one of its return expressions.
 implicitAnyFromCircularInference.ts(22,5): error TS7023: 'f2' implicitly has return type 'any' because it does not have a return type annotation and is referenced directly or indirectly in one of its return expressions.
 implicitAnyFromCircularInference.ts(25,10): error TS7023: 'h' implicitly has return type 'any' because it does not have a return type annotation and is referenced directly or indirectly in one of its return expressions.
 implicitAnyFromCircularInference.ts(27,14): error TS7023: 'foo' implicitly has return type 'any' because it does not have a return type annotation and is referenced directly or indirectly in one of its return expressions.
 implicitAnyFromCircularInference.ts(44,9): error TS7023: 'x' implicitly has return type 'any' because it does not have a return type annotation and is referenced directly or indirectly in one of its return expressions.
 
 
-==== implicitAnyFromCircularInference.ts (8 errors) ====
+==== implicitAnyFromCircularInference.ts (9 errors) ====
     // Error expected
     var a: typeof a;
         ~
@@ -34,6 +35,8 @@ implicitAnyFromCircularInference.ts(44,9): error TS7023: 'x' implicitly has retu
     
     // Error expected
     var f1 = function () {
+        ~~
+!!! error TS7023: 'f1' implicitly has return type 'any' because it does not have a return type annotation and is referenced directly or indirectly in one of its return expressions.
         return f1();
     };
     
diff --git a/tests/baselines/reference/implicitAnyFromCircularInference.types b/tests/baselines/reference/implicitAnyFromCircularInference.types
index 1309591c1d8..a065bc09763 100644
--- a/tests/baselines/reference/implicitAnyFromCircularInference.types
+++ b/tests/baselines/reference/implicitAnyFromCircularInference.types
@@ -45,16 +45,16 @@ function g() { return g(); }
 
 // Error expected
 var f1 = function () {
->f1 : () => never
->   : ^^^^^^^^^^^
->function () {    return f1();} : () => never
->                               :            
+>f1 : () => any
+>   : ^^^^^^^^^
+>function () {    return f1();} : () => any
+>                               :          
 
     return f1();
->f1() : never
->     : ^^^^^
->f1 : () => never
->   : ^^^^^^^^^^^
+>f1() : any
+>     : ^^^
+>f1 : () => any
+>   : ^^^^^^^^^
 
 };
 
diff --git a/tests/baselines/reference/simpleRecursionWithBaseCase3.symbols b/tests/baselines/reference/simpleRecursionWithBaseCase3.symbols
new file mode 100644
index 00000000000..625eed9966b
--- /dev/null
+++ b/tests/baselines/reference/simpleRecursionWithBaseCase3.symbols
@@ -0,0 +1,17 @@
+//// [tests/cases/compiler/simpleRecursionWithBaseCase3.ts] ////
+
+=== simpleRecursionWithBaseCase3.ts ===
+const fn1 = () => {
+>fn1 : Symbol(fn1, Decl(simpleRecursionWithBaseCase3.ts, 0, 5))
+
+  if (Math.random() > 0.5) {
+>Math.random : Symbol(Math.random, Decl(lib.es5.d.ts, --, --))
+>Math : Symbol(Math, Decl(lib.es5.d.ts, --, --), Decl(lib.es5.d.ts, --, --), Decl(lib.es2015.core.d.ts, --, --), Decl(lib.es2015.symbol.wellknown.d.ts, --, --))
+>random : Symbol(Math.random, Decl(lib.es5.d.ts, --, --))
+
+    return fn1()
+>fn1 : Symbol(fn1, Decl(simpleRecursionWithBaseCase3.ts, 0, 5))
+  }
+  return 0
+}
+
diff --git a/tests/baselines/reference/simpleRecursionWithBaseCase3.types b/tests/baselines/reference/simpleRecursionWithBaseCase3.types
new file mode 100644
index 00000000000..56525aab76c
--- /dev/null
+++ b/tests/baselines/reference/simpleRecursionWithBaseCase3.types
@@ -0,0 +1,34 @@
+//// [tests/cases/compiler/simpleRecursionWithBaseCase3.ts] ////
+
+=== simpleRecursionWithBaseCase3.ts ===
+const fn1 = () => {
+>fn1 : () => number
+>    : ^^^^^^^^^^^^
+>() => {  if (Math.random() > 0.5) {    return fn1()  }  return 0} : () => number
+>                                                                  :             
+
+  if (Math.random() > 0.5) {
+>Math.random() > 0.5 : boolean
+>                    : ^^^^^^^
+>Math.random() : number
+>              : ^^^^^^
+>Math.random : () => number
+>            : ^^^^^^^^^^^^
+>Math : Math
+>     : ^^^^
+>random : () => number
+>       : ^^^^^^^^^^^^
+>0.5 : 0.5
+>    : ^^^
+
+    return fn1()
+>fn1() : number
+>      : ^^^^^^
+>fn1 : () => number
+>    : ^^^^^^^^^^^^
+  }
+  return 0
+>0 : 0
+>  : ^
+}
+
diff --git a/tests/baselines/reference/simpleRecursionWithBaseCase4.symbols b/tests/baselines/reference/simpleRecursionWithBaseCase4.symbols
new file mode 100644
index 00000000000..290c57575b7
--- /dev/null
+++ b/tests/baselines/reference/simpleRecursionWithBaseCase4.symbols
@@ -0,0 +1,43 @@
+//// [tests/cases/compiler/simpleRecursionWithBaseCase4.ts] ////
+
+=== simpleRecursionWithBaseCase4.ts ===
+var fn2 = function(name) {
+>fn2 : Symbol(fn2, Decl(simpleRecursionWithBaseCase4.ts, 0, 3))
+>name : Symbol(name, Decl(simpleRecursionWithBaseCase4.ts, 0, 19))
+
+  fn2 = compose(this, 0, 1)
+>fn2 : Symbol(fn2, Decl(simpleRecursionWithBaseCase4.ts, 0, 3))
+>compose : Symbol(compose, Decl(simpleRecursionWithBaseCase4.ts, 2, 18))
+
+  return fn2(name)
+>fn2 : Symbol(fn2, Decl(simpleRecursionWithBaseCase4.ts, 0, 3))
+>name : Symbol(name, Decl(simpleRecursionWithBaseCase4.ts, 0, 19))
+
+  function compose(child, level, find) {
+>compose : Symbol(compose, Decl(simpleRecursionWithBaseCase4.ts, 2, 18))
+>child : Symbol(child, Decl(simpleRecursionWithBaseCase4.ts, 4, 19))
+>level : Symbol(level, Decl(simpleRecursionWithBaseCase4.ts, 4, 25))
+>find : Symbol(find, Decl(simpleRecursionWithBaseCase4.ts, 4, 32))
+
+    if (child === find) {
+>child : Symbol(child, Decl(simpleRecursionWithBaseCase4.ts, 4, 19))
+>find : Symbol(find, Decl(simpleRecursionWithBaseCase4.ts, 4, 32))
+
+      return level
+>level : Symbol(level, Decl(simpleRecursionWithBaseCase4.ts, 4, 25))
+    }
+    return compose(child, level + 1, find)
+>compose : Symbol(compose, Decl(simpleRecursionWithBaseCase4.ts, 2, 18))
+>child : Symbol(child, Decl(simpleRecursionWithBaseCase4.ts, 4, 19))
+>level : Symbol(level, Decl(simpleRecursionWithBaseCase4.ts, 4, 25))
+>find : Symbol(find, Decl(simpleRecursionWithBaseCase4.ts, 4, 32))
+  }
+}
+
+var d = fn2(1); // d: any
+>d : Symbol(d, Decl(simpleRecursionWithBaseCase4.ts, 12, 3))
+>fn2 : Symbol(fn2, Decl(simpleRecursionWithBaseCase4.ts, 0, 3))
+
+d.redefined();
+>d : Symbol(d, Decl(simpleRecursionWithBaseCase4.ts, 12, 3))
+
diff --git a/tests/baselines/reference/simpleRecursionWithBaseCase4.types b/tests/baselines/reference/simpleRecursionWithBaseCase4.types
new file mode 100644
index 00000000000..637ae735011
--- /dev/null
+++ b/tests/baselines/reference/simpleRecursionWithBaseCase4.types
@@ -0,0 +1,74 @@
+//// [tests/cases/compiler/simpleRecursionWithBaseCase4.ts] ////
+
+=== simpleRecursionWithBaseCase4.ts ===
+var fn2 = function(name) {
+>fn2 : (name: any) => any
+>    : ^    ^^^^^^^^^^^^^
+>function(name) {  fn2 = compose(this, 0, 1)  return fn2(name)  function compose(child, level, find) {    if (child === find) {      return level    }    return compose(child, level + 1, find)  }} : (name: any) => any
+>                                                                                                                                                                                                    :                   
+>name : any
+
+  fn2 = compose(this, 0, 1)
+>fn2 = compose(this, 0, 1) : any
+>fn2 : (name: any) => any
+>    : ^    ^^^^^^^^^^^^^
+>compose(this, 0, 1) : any
+>compose : (child: any, level: any, find: any) => any
+>        : ^     ^^^^^^^     ^^^^^^^    ^^^^^^^^^^^^^
+>this : any
+>0 : 0
+>  : ^
+>1 : 1
+>  : ^
+
+  return fn2(name)
+>fn2(name) : any
+>fn2 : (name: any) => any
+>    : ^    ^^^^^^^^^^^^^
+>name : any
+
+  function compose(child, level, find) {
+>compose : (child: any, level: any, find: any) => any
+>        : ^     ^^^^^^^     ^^^^^^^    ^^^^^^^^^^^^^
+>child : any
+>level : any
+>find : any
+
+    if (child === find) {
+>child === find : boolean
+>               : ^^^^^^^
+>child : any
+>find : any
+
+      return level
+>level : any
+    }
+    return compose(child, level + 1, find)
+>compose(child, level + 1, find) : any
+>compose : (child: any, level: any, find: any) => any
+>        : ^     ^^^^^^^     ^^^^^^^    ^^^^^^^^^^^^^
+>child : any
+>level + 1 : any
+>level : any
+>1 : 1
+>  : ^
+>find : any
+  }
+}
+
+var d = fn2(1); // d: any
+>d : any
+>fn2(1) : any
+>fn2 : (name: any) => any
+>    : ^    ^^^^^^^^^^^^^
+>1 : 1
+>  : ^
+
+d.redefined();
+>d.redefined() : any
+>d.redefined : any
+>d : any
+>  : ^^^
+>redefined : any
+>          : ^^^
+
diff --git a/tests/cases/compiler/simpleRecursionWithBaseCase3.ts b/tests/cases/compiler/simpleRecursionWithBaseCase3.ts
new file mode 100644
index 00000000000..a7abf187517
--- /dev/null
+++ b/tests/cases/compiler/simpleRecursionWithBaseCase3.ts
@@ -0,0 +1,11 @@
+// @strict: true
+// @noImplicitAny: true
+// @lib: esnext
+// @noEmit: true
+
+const fn1 = () => {
+  if (Math.random() > 0.5) {
+    return fn1()
+  }
+  return 0
+}
diff --git a/tests/cases/compiler/simpleRecursionWithBaseCase4.ts b/tests/cases/compiler/simpleRecursionWithBaseCase4.ts
new file mode 100644
index 00000000000..96aeea4e2e5
--- /dev/null
+++ b/tests/cases/compiler/simpleRecursionWithBaseCase4.ts
@@ -0,0 +1,18 @@
+// @checkJs: true
+// @noEmit: true
+// @strict: false
+
+var fn2 = function(name) {
+  fn2 = compose(this, 0, 1)
+  return fn2(name)
+
+  function compose(child, level, find) {
+    if (child === find) {
+      return level
+    }
+    return compose(child, level + 1, find)
+  }
+}
+
+var d = fn2(1); // d: any
+d.redefined();