Comment 2 for bug 1730434

And simpler. Oddly, it stops failing if the unused B parameter is removed.

compile nil
  '(lambda (b c)
    (declare (optimize (debug 2)))
    (declare (ignore b))
    (block b8
      (labels ((%f
                   (&optional (f1 (return-from b8 1))
                              (f2 (if t (return-from b8 2) 5))
                              (f3 3)
                              &rest r)
                 (declare (ignore f1 f2 f3 r))
                 (return-from b8 0)))
        (dolist (x c)
          (declare (ignore x))
          (equal 17 (%f 0 1))
          (%f 4 5 6)
          (%f 7)
          )))))