diff --git a/lib/compress.js b/lib/compress.js
index 7de3e535..ac5cd235 100644
--- a/lib/compress.js
+++ b/lib/compress.js
@@ -4005,7 +4005,7 @@ merge(Compressor.prototype, {
                 }
                 if (defs) defs.push(arg.definition());
             }
-            return !defs || defs.length == 0 || !fn.body[0].is_reachable(defs);
+            return !defs || defs.length == 0 || !is_reachable(fn.body[0], defs);
         }
 
         function flatten_args(fn) {
@@ -4845,7 +4845,7 @@ merge(Compressor.prototype, {
         return self;
     });
 
-    AST_Node.DEFMETHOD("is_reachable", function(defs) {
+    function is_reachable(node, defs) {
         var reachable = false;
         var find_ref = new TreeWalker(function(node) {
             if (reachable) return true;
@@ -4853,15 +4853,19 @@ merge(Compressor.prototype, {
                 return reachable = true;
             }
         });
-        this.walk(new TreeWalker(function(node) {
+        var scan_scope = new TreeWalker(function(node) {
             if (reachable) return true;
             if (node instanceof AST_Scope) {
-                node.walk(find_ref);
+                var parent = scan_scope.parent();
+                if (!(parent instanceof AST_Call && parent.expression === node)) {
+                    node.walk(find_ref);
+                }
                 return true;
             }
-        }));
+        });
+        node.walk(scan_scope);
         return reachable;
-    });
+    }
 
     var ASSIGN_OPS = [ '+', '-', '/', '*', '%', '>>', '<<', '>>>', '|', '^', '&' ];
     var ASSIGN_OPS_COMMUTATIVE = [ '*', '|', '^', '&' ];
@@ -4876,7 +4880,7 @@ merge(Compressor.prototype, {
                 parent = compressor.parent(level++);
                 if (parent instanceof AST_Exit) {
                     if (in_try(level, parent instanceof AST_Throw)) break;
-                    if (self.is_reachable([ def ])) break;
+                    if (is_reachable(self, [ def ])) break;
                     if (self.operator == "=") return self.right;
                     return make_node(AST_Binary, self, {
                         operator: self.operator.slice(0, -1),
diff --git a/test/compress/functions.js b/test/compress/functions.js
index 6d446432..888c6e3c 100644
--- a/test/compress/functions.js
+++ b/test/compress/functions.js
@@ -1509,7 +1509,7 @@ issue_2663_1: {
             function createFn(j) {
                 return function() {
                     console.log(j);
-                }
+                };
             }
             for (i in { a: 1, b: 2, c: 3 })
                 o[i] = createFn(i);
@@ -1523,7 +1523,7 @@ issue_2663_1: {
             function createFn(j) {
                 return function() {
                     console.log(j);
-                }
+                };
             }
             for (i in { a: 1, b: 2, c: 3 })
                 o[i] = createFn(i);
@@ -1539,6 +1539,40 @@ issue_2663_1: {
 }
 
 issue_2663_2: {
+    options = {
+        inline: true,
+        reduce_vars: true,
+        side_effects: true,
+        unused: true,
+    }
+    input: {
+        (function() {
+            var i;
+            function fn(j) {
+                return function() {
+                    console.log(j);
+                }();
+            }
+            for (i in { a: 1, b: 2, c: 3 })
+                fn(i);
+        })();
+    }
+    expect: {
+        (function() {
+            var i;
+            for (i in { a: 1, b: 2, c: 3 })
+                j = i, console.log(j);
+            var j;
+        })();
+    }
+    expect_stdout: [
+        "a",
+        "b",
+        "c",
+    ]
+}
+
+issue_2663_3: {
     options = {
         inline: true,
         reduce_vars: true,