diff --git a/internal/checker/relater.go b/internal/checker/relater.go
index 851549487c..5360b732ea 100644
--- a/internal/checker/relater.go
+++ b/internal/checker/relater.go
@@ -4153,7 +4153,7 @@ func (r *Relater) propertiesRelatedTo(source *Type, target *Type, reportErrors b
 		}
 		return TernaryFalse
 	}
-	if target.objectFlags&ObjectFlagsFreshLiteral != 0 {
+	if isObjectLiteralType(target) {
 		for _, sourceProp := range excludeProperties(r.c.getPropertiesOfType(source), excludedProperties) {
 			if r.c.getPropertyOfObjectType(target, sourceProp.Name) == nil {
 				if reportErrors {
diff --git a/testdata/baselines/reference/compiler/freshObjectLiteralSubtype.symbols b/testdata/baselines/reference/compiler/freshObjectLiteralSubtype.symbols
index 33baa87105..0a28784217 100644
--- a/testdata/baselines/reference/compiler/freshObjectLiteralSubtype.symbols
+++ b/testdata/baselines/reference/compiler/freshObjectLiteralSubtype.symbols
@@ -29,7 +29,7 @@ function validate() {
 
     if(Math.random() > 0.5) {
 >Math.random : Symbol(Math.random, Decl(lib.es5.d.ts, --, --))
->Math : Symbol(Math, Decl(lib.es5.d.ts, --, --), Decl(lib.es5.d.ts, --, --))
+>Math : Symbol(Math, Decl(lib.es5.d.ts, --, --), Decl(lib.es5.d.ts, --, --), Decl(lib.es2015.core.d.ts, --, --), Decl(lib.es2015.symbol.wellknown.d.ts, --, --), Decl(lib.esnext.float16.d.ts, --, --))
 >random : Symbol(Math.random, Decl(lib.es5.d.ts, --, --))
 
         return utilValidate();
@@ -63,3 +63,67 @@ validate().msg; // Error in TSGO
 >validate : Symbol(validate, Decl(freshObjectLiteralSubtype.ts, 9, 8))
 >msg : Symbol(msg, Decl(freshObjectLiteralSubtype.ts, 22, 19), Decl(freshObjectLiteralSubtype.ts, 25, 19))
 
+// https://github.com/microsoft/typescript-go/issues/1761
+
+function normalise_trace_logs([log]: any[]) {
+>normalise_trace_logs : Symbol(normalise_trace_logs, Decl(freshObjectLiteralSubtype.ts, 29, 15))
+>log : Symbol(log, Decl(freshObjectLiteralSubtype.ts, 33, 31))
+
+	let normalised = [];
+>normalised : Symbol(normalised, Decl(freshObjectLiteralSubtype.ts, 34, 4))
+
+    if (typeof log === "string" && log.includes("%c")) {
+>log : Symbol(log, Decl(freshObjectLiteralSubtype.ts, 33, 31))
+>log.includes : Symbol(String.includes, Decl(lib.es2015.core.d.ts, --, --))
+>log : Symbol(log, Decl(freshObjectLiteralSubtype.ts, 33, 31))
+>includes : Symbol(String.includes, Decl(lib.es2015.core.d.ts, --, --))
+
+        normalised.push({ log, highlighted: log.includes("foo") });
+>normalised.push : Symbol(Array.push, Decl(lib.es5.d.ts, --, --))
+>normalised : Symbol(normalised, Decl(freshObjectLiteralSubtype.ts, 34, 4))
+>push : Symbol(Array.push, Decl(lib.es5.d.ts, --, --))
+>log : Symbol(log, Decl(freshObjectLiteralSubtype.ts, 36, 25))
+>highlighted : Symbol(highlighted, Decl(freshObjectLiteralSubtype.ts, 36, 30))
+>log.includes : Symbol(String.includes, Decl(lib.es2015.core.d.ts, --, --))
+>log : Symbol(log, Decl(freshObjectLiteralSubtype.ts, 33, 31))
+>includes : Symbol(String.includes, Decl(lib.es2015.core.d.ts, --, --))
+
+    } else {
+        normalised.push({ log });
+>normalised.push : Symbol(Array.push, Decl(lib.es5.d.ts, --, --))
+>normalised : Symbol(normalised, Decl(freshObjectLiteralSubtype.ts, 34, 4))
+>push : Symbol(Array.push, Decl(lib.es5.d.ts, --, --))
+>log : Symbol(log, Decl(freshObjectLiteralSubtype.ts, 38, 25))
+    }
+	return normalised;
+>normalised : Symbol(normalised, Decl(freshObjectLiteralSubtype.ts, 34, 4))
+}
+
+function equal<T>(_actual: T, _expected: T): void {}
+>equal : Symbol(equal, Decl(freshObjectLiteralSubtype.ts, 41, 1))
+>T : Symbol(T, Decl(freshObjectLiteralSubtype.ts, 43, 15))
+>_actual : Symbol(_actual, Decl(freshObjectLiteralSubtype.ts, 43, 18))
+>T : Symbol(T, Decl(freshObjectLiteralSubtype.ts, 43, 15))
+>_expected : Symbol(_expected, Decl(freshObjectLiteralSubtype.ts, 43, 29))
+>T : Symbol(T, Decl(freshObjectLiteralSubtype.ts, 43, 15))
+
+equal(normalise_trace_logs([]), [
+>equal : Symbol(equal, Decl(freshObjectLiteralSubtype.ts, 41, 1))
+>normalise_trace_logs : Symbol(normalise_trace_logs, Decl(freshObjectLiteralSubtype.ts, 29, 15))
+
+    { log: 'effect' },
+>log : Symbol(log, Decl(freshObjectLiteralSubtype.ts, 46, 5))
+
+    { log: '$derived', highlighted: true },
+>log : Symbol(log, Decl(freshObjectLiteralSubtype.ts, 47, 5))
+>highlighted : Symbol(highlighted, Decl(freshObjectLiteralSubtype.ts, 47, 22))
+
+    { log: 'double', highlighted: false },
+>log : Symbol(log, Decl(freshObjectLiteralSubtype.ts, 48, 5))
+>highlighted : Symbol(highlighted, Decl(freshObjectLiteralSubtype.ts, 48, 20))
+
+    { log: 4 },
+>log : Symbol(log, Decl(freshObjectLiteralSubtype.ts, 49, 5))
+
+]);
+
diff --git a/testdata/baselines/reference/compiler/freshObjectLiteralSubtype.types b/testdata/baselines/reference/compiler/freshObjectLiteralSubtype.types
index 67d163471e..4c368aa669 100644
--- a/testdata/baselines/reference/compiler/freshObjectLiteralSubtype.types
+++ b/testdata/baselines/reference/compiler/freshObjectLiteralSubtype.types
@@ -78,3 +78,91 @@ validate().msg; // Error in TSGO
 >validate : () => { valid: boolean; msg?: undefined; } | { valid: boolean; msg: string; }
 >msg : string | undefined
 
+// https://github.com/microsoft/typescript-go/issues/1761
+
+function normalise_trace_logs([log]: any[]) {
+>normalise_trace_logs : ([log]: any[]) => ({ log: string; highlighted: boolean; } | { highlighted?: undefined; log: any; })[]
+>log : any
+
+	let normalised = [];
+>normalised : any[]
+>[] : never[]
+
+    if (typeof log === "string" && log.includes("%c")) {
+>typeof log === "string" && log.includes("%c") : boolean
+>typeof log === "string" : boolean
+>typeof log : "bigint" | "boolean" | "function" | "number" | "object" | "string" | "symbol" | "undefined"
+>log : any
+>"string" : "string"
+>log.includes("%c") : boolean
+>log.includes : (searchString: string, position?: number | undefined) => boolean
+>log : string
+>includes : (searchString: string, position?: number | undefined) => boolean
+>"%c" : "%c"
+
+        normalised.push({ log, highlighted: log.includes("foo") });
+>normalised.push({ log, highlighted: log.includes("foo") }) : number
+>normalised.push : (...items: any[]) => number
+>normalised : any[]
+>push : (...items: any[]) => number
+>{ log, highlighted: log.includes("foo") } : { log: string; highlighted: boolean; }
+>log : string
+>highlighted : boolean
+>log.includes("foo") : boolean
+>log.includes : (searchString: string, position?: number | undefined) => boolean
+>log : string
+>includes : (searchString: string, position?: number | undefined) => boolean
+>"foo" : "foo"
+
+    } else {
+        normalised.push({ log });
+>normalised.push({ log }) : number
+>normalised.push : (...items: any[]) => number
+>normalised : any[]
+>push : (...items: any[]) => number
+>{ log } : { log: any; }
+>log : any
+    }
+	return normalised;
+>normalised : ({ log: string; highlighted: boolean; } | { log: any; })[]
+}
+
+function equal<T>(_actual: T, _expected: T): void {}
+>equal : <T>(_actual: T, _expected: T) => void
+>_actual : T
+>_expected : T
+
+equal(normalise_trace_logs([]), [
+>equal(normalise_trace_logs([]), [    { log: 'effect' },    { log: '$derived', highlighted: true },    { log: 'double', highlighted: false },    { log: 4 },]) : void
+>equal : <T>(_actual: T, _expected: T) => void
+>normalise_trace_logs([]) : ({ log: string; highlighted: boolean; } | { highlighted?: undefined; log: any; })[]
+>normalise_trace_logs : ([log]: any[]) => ({ log: string; highlighted: boolean; } | { highlighted?: undefined; log: any; })[]
+>[] : never[]
+>[    { log: 'effect' },    { log: '$derived', highlighted: true },    { log: 'double', highlighted: false },    { log: 4 },] : ({ log: string; } | { log: string; highlighted: true; } | { log: string; highlighted: false; } | { log: number; })[]
+
+    { log: 'effect' },
+>{ log: 'effect' } : { log: string; }
+>log : string
+>'effect' : "effect"
+
+    { log: '$derived', highlighted: true },
+>{ log: '$derived', highlighted: true } : { log: string; highlighted: true; }
+>log : string
+>'$derived' : "$derived"
+>highlighted : true
+>true : true
+
+    { log: 'double', highlighted: false },
+>{ log: 'double', highlighted: false } : { log: string; highlighted: false; }
+>log : string
+>'double' : "double"
+>highlighted : false
+>false : false
+
+    { log: 4 },
+>{ log: 4 } : { log: number; }
+>log : number
+>4 : 4
+
+]);
+
diff --git a/testdata/tests/cases/compiler/freshObjectLiteralSubtype.ts b/testdata/tests/cases/compiler/freshObjectLiteralSubtype.ts
index 750d818586..82707983f4 100644
--- a/testdata/tests/cases/compiler/freshObjectLiteralSubtype.ts
+++ b/testdata/tests/cases/compiler/freshObjectLiteralSubtype.ts
@@ -1,5 +1,6 @@
 // @strict: true
 // @noEmit: true
+// @target: esnext
 
 function f1() {
     if (!!true) {
@@ -31,3 +32,24 @@ declare function utilValidate(): {
 }
 
 validate().msg; // Error in TSGO
+
+// https://github.com/microsoft/typescript-go/issues/1761
+
+function normalise_trace_logs([log]: any[]) {
+	let normalised = [];
+    if (typeof log === "string" && log.includes("%c")) {
+        normalised.push({ log, highlighted: log.includes("foo") });
+    } else {
+        normalised.push({ log });
+    }
+	return normalised;
+}
+
+function equal<T>(_actual: T, _expected: T): void {}
+
+equal(normalise_trace_logs([]), [
+    { log: 'effect' },
+    { log: '$derived', highlighted: true },
+    { log: 'double', highlighted: false },
+    { log: 4 },
+]);