diff --git a/java/java-impl/src/com/intellij/refactoring/extractMethod/newImpl/ExtractOptionsPipeline.kt b/java/java-impl/src/com/intellij/refactoring/extractMethod/newImpl/ExtractOptionsPipeline.kt
index e6d611187538..312fd7867d72 100644
--- a/java/java-impl/src/com/intellij/refactoring/extractMethod/newImpl/ExtractOptionsPipeline.kt
+++ b/java/java-impl/src/com/intellij/refactoring/extractMethod/newImpl/ExtractOptionsPipeline.kt
@@ -209,7 +209,8 @@ object ExtractMethodPipeline {
   }
 
   fun withForcedStatic(analyzer: CodeFragmentAnalyzer, extractOptions: ExtractOptions): ExtractOptions? {
-    val targetClass = PsiTreeUtil.getParentOfType(ExtractMethodHelper.getValidParentOf(extractOptions.elements.first()), PsiClass::class.java)!!
+    val targetClass = PsiTreeUtil.getParentOfType(extractOptions.anchor, PsiClass::class.java)!!
+    if (PsiUtil.isLocalOrAnonymousClass(targetClass) || PsiUtil.isInnerClass(targetClass)) return null
     val fieldUsages = analyzer.findLocalFieldUsages(targetClass, extractOptions.elements)
     if (fieldUsages.any { it.isWrite }) return null
     val fieldInputParameters =
diff --git a/java/java-impl/src/com/intellij/refactoring/extractMethod/newImpl/MethodExtractor.kt b/java/java-impl/src/com/intellij/refactoring/extractMethod/newImpl/MethodExtractor.kt
index 8304626980c5..b4d9806cee45 100644
--- a/java/java-impl/src/com/intellij/refactoring/extractMethod/newImpl/MethodExtractor.kt
+++ b/java/java-impl/src/com/intellij/refactoring/extractMethod/newImpl/MethodExtractor.kt
@@ -126,7 +126,8 @@ class MethodExtractor {
 
     val candidates = ExtractMethodPipeline.findTargetCandidates(analyzer, options)
     val defaultTargetClass = candidates.firstOrNull { it !is PsiAnonymousClass } ?: candidates.first()
-    options = ExtractMethodPipeline.withTargetClass(analyzer, options, defaultTargetClass) ?: throw ExtractException("Fail", elements.first())
+    options = ExtractMethodPipeline.withTargetClass(analyzer, options, targetClass ?: defaultTargetClass)
+                                    ?: throw ExtractException("Fail", elements.first())
     options = options.copy(methodName = "newMethod")
     if (isConstructor != options.isConstructor){
       options = ExtractMethodPipeline.asConstructor(analyzer, options) ?: throw ExtractException("Fail", elements.first())
@@ -142,9 +143,6 @@ class MethodExtractor {
     if (returnType != null) {
       options = options.copy(dataOutput = options.dataOutput.withType(returnType))
     }
-    if (targetClass != null) {
-      options = ExtractMethodPipeline.withTargetClass(analyzer, options, targetClass) ?: options
-    }
     if (disabledParameters.isNotEmpty()) {
       options = options.copy(
         disabledParameters = options.inputParameters.filterIndexed { index, _ -> index in disabledParameters },
diff --git a/java/java-tests/testData/refactoring/extractMethodNew/NoStaticForInnerClass.java b/java/java-tests/testData/refactoring/extractMethodNew/NoStaticForInnerClass.java
new file mode 100644
index 000000000000..686726b198fc
--- /dev/null
+++ b/java/java-tests/testData/refactoring/extractMethodNew/NoStaticForInnerClass.java
@@ -0,0 +1,7 @@
+class Outer {
+    class Inner {
+        {
+            <selection>int i = 0;</selection>
+        }
+    }
+}
\ No newline at end of file
diff --git a/java/java-tests/testData/refactoring/extractMethodNew/StaticForNestedClass.java b/java/java-tests/testData/refactoring/extractMethodNew/StaticForNestedClass.java
new file mode 100644
index 000000000000..3a93547d9923
--- /dev/null
+++ b/java/java-tests/testData/refactoring/extractMethodNew/StaticForNestedClass.java
@@ -0,0 +1,7 @@
+class Outer {
+    static class Nested {
+        {
+            <selection>int i = 0;</selection>
+        }
+    }
+}
\ No newline at end of file
diff --git a/java/java-tests/testData/refactoring/extractMethodNew/StaticForNestedClass_after.java b/java/java-tests/testData/refactoring/extractMethodNew/StaticForNestedClass_after.java
new file mode 100644
index 000000000000..f1ddb3e9dcb7
--- /dev/null
+++ b/java/java-tests/testData/refactoring/extractMethodNew/StaticForNestedClass_after.java
@@ -0,0 +1,11 @@
+class Outer {
+    static class Nested {
+        {
+            newMethod();
+        }
+
+        private static void newMethod() {
+            int i = 0;
+        }
+    }
+}
\ No newline at end of file
diff --git a/java/java-tests/testData/refactoring/extractMethodNew/StaticForOuterClass.java b/java/java-tests/testData/refactoring/extractMethodNew/StaticForOuterClass.java
new file mode 100644
index 000000000000..686726b198fc
--- /dev/null
+++ b/java/java-tests/testData/refactoring/extractMethodNew/StaticForOuterClass.java
@@ -0,0 +1,7 @@
+class Outer {
+    class Inner {
+        {
+            <selection>int i = 0;</selection>
+        }
+    }
+}
\ No newline at end of file
diff --git a/java/java-tests/testData/refactoring/extractMethodNew/StaticForOuterClass_after.java b/java/java-tests/testData/refactoring/extractMethodNew/StaticForOuterClass_after.java
new file mode 100644
index 000000000000..73d10ed11529
--- /dev/null
+++ b/java/java-tests/testData/refactoring/extractMethodNew/StaticForOuterClass_after.java
@@ -0,0 +1,11 @@
+class Outer {
+    class Inner {
+        {
+            newMethod();
+        }
+    }
+
+    private static void newMethod() {
+        int i = 0;
+    }
+}
\ No newline at end of file
diff --git a/java/java-tests/testSrc/com/intellij/java/refactoring/ExtractMethodNewTest.java b/java/java-tests/testSrc/com/intellij/java/refactoring/ExtractMethodNewTest.java
index 6600fc62d7c2..f6b53994792f 100644
--- a/java/java-tests/testSrc/com/intellij/java/refactoring/ExtractMethodNewTest.java
+++ b/java/java-tests/testSrc/com/intellij/java/refactoring/ExtractMethodNewTest.java
@@ -1414,6 +1414,29 @@ public class ExtractMethodNewTest extends LightJavaCodeInsightTestCase {
     checkResultByFile(BASE_PATH + getTestName(false) + "_after.java");
   }
 
+  public void testNoStaticForInnerClass() {
+    try {
+      configureByFile(BASE_PATH + getTestName(false) + ".java");
+      performExtractMethod(true, true, getEditor(), getFile(), getProject(), false, null, true, null, null, null);
+      fail("Static modifier is forbidden inside inner classes");
+    } catch (PrepareFailedException e){
+    }
+  }
+
+  public void testStaticForNestedClass() throws Exception {
+    configureByFile(BASE_PATH + getTestName(false) + ".java");
+    performExtractMethod(true, true, getEditor(), getFile(), getProject(), false, null, true, null, null, null);
+    checkResultByFile(BASE_PATH + getTestName(false) + "_after.java");
+  }
+
+  public void testStaticForOuterClass() throws Exception {
+    configureByFile(BASE_PATH + getTestName(false) + ".java");
+    final int caret = getEditor().getSelectionModel().getLeadSelectionOffset();
+    final PsiClass outerClass = PsiTreeUtil.getParentOfType(getFile().findElementAt(caret), PsiClass.class).getContainingClass();
+    performExtractMethod(true, true, getEditor(), getFile(), getProject(), false, null, true, null, outerClass, null);
+    checkResultByFile(BASE_PATH + getTestName(false) + "_after.java");
+  }
+
   public void testDontMakeParametersFinalDueToUsagesInsideAnonymous() throws Exception {
     doTest();
   }