--- a/langtools/src/share/classes/com/sun/tools/javac/comp/LambdaToMethod.java	Tue Apr 15 15:52:52 2014 -0700
+++ b/langtools/src/share/classes/com/sun/tools/javac/comp/LambdaToMethod.java	Tue Apr 15 15:55:24 2014 -0700
@@ -1893,11 +1893,11 @@
                         };
                         break;
                     case LOCAL_VAR:
-                        ret = new VarSymbol(FINAL, name, types.erasure(sym.type), translatedSym);
+                        ret = new VarSymbol(sym.flags() & FINAL, name, types.erasure(sym.type), translatedSym);
                         ((VarSymbol) ret).pos = ((VarSymbol) sym).pos;
                         break;
                     case PARAM:
-                        ret = new VarSymbol(FINAL | PARAMETER, name, types.erasure(sym.type), translatedSym);
+                        ret = new VarSymbol((sym.flags() & FINAL) | PARAMETER, name, types.erasure(sym.type), translatedSym);
                         ((VarSymbol) ret).pos = ((VarSymbol) sym).pos;
                         break;
                     default:

--- /dev/null	Thu Jan 01 00:00:00 1970 +0000
+++ b/langtools/test/tools/javac/lambda/T8038420/LambdaIncrement.java	Tue Apr 15 15:55:24 2014 -0700
@@ -0,0 +1,52 @@
+/*
+ * Copyright (c) 2014, 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.  Oracle designates this
+ * particular file as subject to the "Classpath" exception as provided
+ * by Oracle in the LICENSE file that accompanied this code.
+ *
+ * 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 8038420
+ * @summary Lambda returning post-increment generates wrong code
+ * @run main LambdaIncrement
+ */
+
+public class LambdaIncrement {
+
+    interface IntegerOp { Integer apply(Integer arg); }
+
+    private static void assertNotIncremented(IntegerOp lmb, String label) {
+        int result = lmb.apply(3);
+        if (result != 3) {
+            throw new AssertionError("Post-increment failure. Expected 3, got: " +
+                                     result + " " + label);
+        }
+    }
+
+    public static void main(String... args) throws Exception {
+        assertNotIncremented(x -> x++, "PostIncExpr");
+        assertNotIncremented(x -> { return x++; }, "PostIncReturn");
+        assertNotIncremented(x -> { int y = x; return y++; }, "PostIncLocal");
+        assertNotIncremented(x -> { Integer y = x; return y++; }, "PostIncLocalBox");
+        assertNotIncremented(x -> { int y = x; return y; }, "HASINIT");
+    }
+}