diff --git a/compiler/forget/src/__tests__/fixtures/compiler/useEffect-nested-lambdas.expect.md b/compiler/forget/src/__tests__/fixtures/compiler/useEffect-nested-lambdas.expect.md
new file mode 100644
index 0000000000..717093de0d
--- /dev/null
+++ b/compiler/forget/src/__tests__/fixtures/compiler/useEffect-nested-lambdas.expect.md
@@ -0,0 +1,62 @@
+
+## Input
+
+```javascript
+function Component(props) {
+  const item = useMutable(props.itemId);
+  const dispatch = useDispatch();
+
+  const exit = useCallback(() => {
+    dispatch(createExitAction());
+  }, [dispatch]);
+
+  useEffect(() => {
+    const cleanup = GlobalEventEmitter.addListener("onInput", () => {
+      if (item.value) {
+        exit();
+      }
+    });
+    return () => cleanup.remove();
+  }, [exit, item]);
+
+  maybeMutate(item);
+
+  return <div />;
+}
+
+```
+
+## Code
+
+```javascript
+function Component(props) {
+  const $ = React.unstable_useMemoCache(1);
+  const item = useMutable(props.itemId);
+  const dispatch = useDispatch();
+
+  const exit = () => {
+    dispatch(createExitAction());
+  };
+
+  useEffect(() => {
+    const cleanup = GlobalEventEmitter.addListener("onInput", () => {
+      if (item.value) {
+        exit();
+      }
+    });
+    return () => cleanup.remove();
+  }, [exit, item]);
+
+  maybeMutate(item);
+  let t0;
+  if ($[0] === Symbol.for("react.memo_cache_sentinel")) {
+    t0 = <div />;
+    $[0] = t0;
+  } else {
+    t0 = $[0];
+  }
+  return t0;
+}
+
+```
+      
\ No newline at end of file
diff --git a/compiler/forget/src/__tests__/fixtures/compiler/useEffect-nested-lambdas.js b/compiler/forget/src/__tests__/fixtures/compiler/useEffect-nested-lambdas.js
new file mode 100644
index 0000000000..48da074a8f
--- /dev/null
+++ b/compiler/forget/src/__tests__/fixtures/compiler/useEffect-nested-lambdas.js
@@ -0,0 +1,21 @@
+function Component(props) {
+  const item = useMutable(props.itemId);
+  const dispatch = useDispatch();
+
+  const exit = useCallback(() => {
+    dispatch(createExitAction());
+  }, [dispatch]);
+
+  useEffect(() => {
+    const cleanup = GlobalEventEmitter.addListener("onInput", () => {
+      if (item.value) {
+        exit();
+      }
+    });
+    return () => cleanup.remove();
+  }, [exit, item]);
+
+  maybeMutate(item);
+
+  return <div />;
+}