diff --git a/compiler/src/prog8/compiler/astprocessing/AstChecker.kt b/compiler/src/prog8/compiler/astprocessing/AstChecker.kt
index 7dd0fe931..291cfd33a 100644
--- a/compiler/src/prog8/compiler/astprocessing/AstChecker.kt
+++ b/compiler/src/prog8/compiler/astprocessing/AstChecker.kt
@@ -205,7 +205,7 @@ internal class AstChecker(private val program: Program,
 
         if(subroutine.inline) {
             if (subroutine.containsDefinedVariables())
-                err("can't inline a subroutine that defines variables")
+                err("can't inline a subroutine that defines variables (might also be a generated intermediate variable for complex return expressions)")
             if (!subroutine.isAsmSubroutine && subroutine.parameters.isNotEmpty())
                 err("can't inline a non-asm subroutine that has parameters")
         }
diff --git a/docs/source/todo.rst b/docs/source/todo.rst
index 93dd5395a..2e98e58fe 100644
--- a/docs/source/todo.rst
+++ b/docs/source/todo.rst
@@ -2,6 +2,7 @@
 TODO
 ====
 
+- allow inlining of subroutines with vardecls
 - optimize several inner loops in gfx2
 - hoist all variable declarations up to the subroutine scope *before* even the constant folding takes place (to avoid undefined symbol errors when referring to a variable from another nested scope in the subroutine)
 - optimize swap of two memread values with index, using the same pointer expression/variable, like swap(@(ptr+1), @(ptr+2))
diff --git a/examples/test.p8 b/examples/test.p8
index 7eb4329cf..4ac15b131 100644
--- a/examples/test.p8
+++ b/examples/test.p8
@@ -1,27 +1,11 @@
 %import textio
 %zeropage basicsafe
-%option no_sysinit
 
 main {
 
     sub start() {
-
-        ubyte color=0
-        ubyte xx
-        uword ptr = $0400
-
-        @($02) = 0
-
-        repeat {
-            sys.waitvsync()
-            %asm {{
-                ldy  $02
-                lda  #'*'
-                sta  $0400,y
-                inc  $02
-            }}
-        }
-        txt.print("hello")
+        ubyte thing = otherblock.othersub()
+        txt.print_ub(thing)     ; should print 99!
 
 ;        str filename = "titlescreen.bin"
 ;        ubyte success = cx16.vload(filename, 8, 0, $0000)
@@ -38,3 +22,16 @@ main {
     }
 }
 
+otherblock {
+
+    ubyte othervar=20
+    ubyte calcparam=10
+
+    sub calc(ubyte zz) -> ubyte {
+        return zz+1
+    }
+
+    inline sub othersub() -> ubyte {
+        return calc(calcparam)
+    }
+}