diff --git a/libgfortran/ChangeLog b/libgfortran/ChangeLog
index 932c85efd7c..23746839c5d 100644
--- a/libgfortran/ChangeLog
+++ b/libgfortran/ChangeLog
@@ -1,3 +1,10 @@
+2009-07-17  Janne Blomqvist  <jb@gcc.gnu.org>
+	    Jerry DeLisle  <jvdelisle@gcc.gnu.org>
+		
+	PR libfortran/40714
+	* io/transfer.c (finalize_transfer): Set current_record to 0
+	before returning in case of error.
+
 2009-07-12  Tobias Burnus  <burnus@net-b.de>
 
 	PR libfortran/22423
diff --git a/libgfortran/io/transfer.c b/libgfortran/io/transfer.c
index 7d833b78013..59f88d4fb9b 100644
--- a/libgfortran/io/transfer.c
+++ b/libgfortran/io/transfer.c
@@ -3103,7 +3103,11 @@ finalize_transfer (st_parameter_dt *dtp)
     }
 
   if ((dtp->common.flags & IOPARM_LIBRETURN_MASK) != IOPARM_LIBRETURN_OK)
-    return;
+    {
+      if (dtp->u.p.current_unit && current_mode (dtp) == UNFORMATTED_SEQUENTIAL)
+	dtp->u.p.current_unit->current_record = 0;
+      return;
+    }
 
   if ((dtp->u.p.ionml != NULL)
       && (cf & IOPARM_DT_HAS_NAMELIST_NAME) != 0)