Adjust scope of declarations within a Local Function Statement according to the latest design.

Related to #12597.

src/Compilers/CSharp/Portable/Binder/Binder.cs

@@ -760,5 +760,22 @@ internal BoundStatement WrapWithVariablesIfAny(CSharpSyntaxNode scopeDesignator,
                                   ImmutableArray.Create(statement))
                         { WasCompilerGenerated = true };
         }
+
+        /// <summary>
+        /// Should only be used with scopes that could declare local functions.
+        /// </summary>
+        internal BoundStatement WrapWithVariablesAndLocalFunctionsIfAny(CSharpSyntaxNode scopeDesignator, BoundStatement statement)
+        {
+            var locals = this.GetDeclaredLocalsForScope(scopeDesignator);
+            var localFunctions = this.GetDeclaredLocalFunctionsForScope(scopeDesignator);
+            if (locals.IsEmpty && localFunctions.IsEmpty)
+            {
+                return statement;
+            }
+
+            return new BoundBlock(statement.Syntax, locals, localFunctions,
+                                  ImmutableArray.Create(statement))
+            { WasCompilerGenerated = true };
+        }
     }
 }

src/Compilers/CSharp/Portable/Binder/Binder_Statements.cs

@@ -272,6 +272,8 @@ internal virtual BoundStatement BindUsingStatementParts(DiagnosticBag diagnostic
 
         internal BoundStatement BindPossibleEmbeddedStatement(StatementSyntax node, DiagnosticBag diagnostics)
         {
+            Binder binder;
+
             switch (node.Kind())
             {
                 case SyntaxKind.ExpressionStatement:
@@ -281,11 +283,16 @@ internal BoundStatement BindPossibleEmbeddedStatement(StatementSyntax node, Diag
                 case SyntaxKind.IfStatement:
                 case SyntaxKind.YieldReturnStatement:
                 case SyntaxKind.LocalDeclarationStatement:
-                case SyntaxKind.LabeledStatement:
-                    Binder binder = this.GetBinder(node);
+                    binder = this.GetBinder(node);
                     Debug.Assert(binder != null);
                     return binder.WrapWithVariablesIfAny(node, binder.BindStatement(node, diagnostics));
 
+                case SyntaxKind.LabeledStatement:
+                case SyntaxKind.LocalFunctionStatement:
+                    binder = this.GetBinder(node);
+                    Debug.Assert(binder != null);
+                    return binder.WrapWithVariablesAndLocalFunctionsIfAny(node, binder.BindStatement(node, diagnostics));
+
                 case SyntaxKind.SwitchStatement:
                     var switchStatement = (SwitchStatementSyntax)node;
                     binder = this.GetBinder(switchStatement.Expression);

src/Compilers/CSharp/Test/Semantic/Semantics/LocalFunctionTests.cs

@@ -3785,7 +3785,39 @@ static void Main(string[] args)
                 Diagnostic(ErrorCode.ERR_InvalidExprTerm, ")").WithArguments(")").WithLocation(6, 13),
                 // (7,9): error CS1023: Embedded statement cannot be a declaration or labeled statement
                 //         int Add(int x, int y) => x + y;
-                Diagnostic(ErrorCode.ERR_BadEmbeddedStmt, "int Add(int x, int y) => x + y;").WithLocation(7, 9)
+                Diagnostic(ErrorCode.ERR_BadEmbeddedStmt, "int Add(int x, int y) => x + y;").WithLocation(7, 9),
+                // (7,13): warning CS0168: The variable 'Add' is declared but never used
+                //         int Add(int x, int y) => x + y;
+                Diagnostic(ErrorCode.WRN_UnreferencedVar, "Add").WithArguments("Add").WithLocation(7, 13)
+                );
+        }
+
+        [Fact, WorkItem(10521, "https://github.com/dotnet/roslyn/issues/10521")]
+        public void LabeledLocalFunctionInIf()
+        {
+            var source = @"
+class Program
+{
+    static void Main(string[] args)
+    {
+        if () // typing at this point
+a:      int Add(int x, int y) => x + y;
+    }
+}
+";
+            VerifyDiagnostics(source,
+                // (6,13): error CS1525: Invalid expression term ')'
+                //         if () // typing at this point
+                Diagnostic(ErrorCode.ERR_InvalidExprTerm, ")").WithArguments(")").WithLocation(6, 13),
+                // (7,1): error CS1023: Embedded statement cannot be a declaration or labeled statement
+                // a:      int Add(int x, int y) => x + y;
+                Diagnostic(ErrorCode.ERR_BadEmbeddedStmt, "a:      int Add(int x, int y) => x + y;").WithLocation(7, 1),
+                // (7,1): warning CS0164: This label has not been referenced
+                // a:      int Add(int x, int y) => x + y;
+                Diagnostic(ErrorCode.WRN_UnreferencedLabel, "a").WithLocation(7, 1),
+                // (7,13): warning CS0168: The variable 'Add' is declared but never used
+                // a:      int Add(int x, int y) => x + y;
+                Diagnostic(ErrorCode.WRN_UnreferencedVar, "Add").WithArguments("Add").WithLocation(7, 13)
                 );
         }