diff --git a/test/compress/issue-1034.js b/test/compress/issue-1034.js
index b502eff8..039af2ed 100644
--- a/test/compress/issue-1034.js
+++ b/test/compress/issue-1034.js
@@ -1,4 +1,4 @@
-non_hoisted_function_def_after_return: {
+non_hoisted_function_after_return: {
     options = {
         hoist_funs: false, dead_code: true, conditionals: true, comparisons: true,
         evaluate: true, booleans: true, loops: true, unused: true, keep_fargs: true,
@@ -34,3 +34,104 @@ non_hoisted_function_def_after_return: {
     ]
 }
 
+non_hoisted_function_after_return_2a: {
+    options = {
+        hoist_funs: false, dead_code: true, conditionals: true, comparisons: true,
+        evaluate: true, booleans: true, loops: true, unused: true, keep_fargs: true,
+        if_return: true, join_vars: true, cascade: true, side_effects: true,
+        collapse_vars: false
+    }
+    input: {
+        function foo(x) {
+            if (x) {
+                return bar(1);
+                var a = not_called(1);
+            } else {
+                return bar(2);
+                var b = not_called(2);
+            }
+            var c = bar(3);
+            function bar(x) { return 7 - x; }
+            function nope() {}
+            return b || c;
+        }
+    }
+    expect: {
+        // NOTE: Output is correct, but suboptimal. Not a regression. Can be improved in future.
+        //       This output is run through non_hoisted_function_after_return_2b with same flags.
+        function foo(x) {
+            if (x) {
+                return bar(1);
+            } else {
+                return bar(2);
+                var b;
+            }
+            var c = bar(3);
+            function bar(x) {
+                return 7 - x;
+            }
+            return b || c;
+        }
+    }
+    expect_warnings: [
+        "WARN: Dropping unreachable code [test/compress/issue-1034.js:48,16]",
+        "WARN: Declarations in unreachable code! [test/compress/issue-1034.js:48,16]",
+        "WARN: Dropping unreachable code [test/compress/issue-1034.js:51,16]",
+        "WARN: Declarations in unreachable code! [test/compress/issue-1034.js:51,16]",
+        "WARN: Dropping unused variable a [test/compress/issue-1034.js:48,20]",
+        "WARN: Dropping unused function nope [test/compress/issue-1034.js:55,21]"
+    ]
+}
+
+non_hoisted_function_after_return_2b: {
+    options = {
+        hoist_funs: false, dead_code: true, conditionals: true, comparisons: true,
+        evaluate: true, booleans: true, loops: true, unused: true, keep_fargs: true,
+        if_return: true, join_vars: true, cascade: true, side_effects: true,
+        collapse_vars: false
+    }
+    input: {
+        // Note: output of test non_hoisted_function_after_return_2a run through compress again
+        function foo(x) {
+            if (x) {
+                return bar(1);
+            } else {
+                return bar(2);
+                var b;
+            }
+            var c = bar(3);
+            function bar(x) {
+                return 7 - x;
+            }
+            return b || c;
+        }
+    }
+    expect: {
+        // the output we would have liked to see from non_hoisted_function_after_return_2a
+        function foo(x) {
+            return bar(x ? 1 : 2);
+            function bar(x) { return 7 - x; }
+        }
+    }
+    expect_warnings: [
+        // Notice that some warnings are repeated by multiple compress passes.
+        // Not a regression. There is room for improvement here.
+        // Warnings should be cached and only output if unique.
+        "WARN: Dropping unreachable code [test/compress/issue-1034.js:100,16]",
+        "WARN: Declarations in unreachable code! [test/compress/issue-1034.js:100,16]",
+        "WARN: Dropping unreachable code [test/compress/issue-1034.js:100,16]",
+        "WARN: Declarations in unreachable code! [test/compress/issue-1034.js:100,16]",
+        "WARN: Dropping unreachable code [test/compress/issue-1034.js:100,16]",
+        "WARN: Declarations in unreachable code! [test/compress/issue-1034.js:100,16]",
+        "WARN: Dropping unreachable code [test/compress/issue-1034.js:100,16]",
+        "WARN: Declarations in unreachable code! [test/compress/issue-1034.js:100,16]",
+        "WARN: Dropping unreachable code [test/compress/issue-1034.js:102,12]",
+        "WARN: Declarations in unreachable code! [test/compress/issue-1034.js:102,12]",
+        "WARN: Dropping unreachable code [test/compress/issue-1034.js:106,12]",
+        "WARN: Dropping unreachable code [test/compress/issue-1034.js:100,16]",
+        "WARN: Declarations in unreachable code! [test/compress/issue-1034.js:100,16]",
+        "WARN: Dropping unused variable b [test/compress/issue-1034.js:100,20]",
+        "WARN: Dropping unused variable c [test/compress/issue-1034.js:102,16]"
+    ]
+}
+