diff --git a/services/core/java/com/android/server/wm/LetterboxUiController.java b/services/core/java/com/android/server/wm/LetterboxUiController.java
index ea82417a2389b..74a236bd862c7 100644
--- a/services/core/java/com/android/server/wm/LetterboxUiController.java
+++ b/services/core/java/com/android/server/wm/LetterboxUiController.java
@@ -501,12 +501,16 @@ final class LetterboxUiController {
 
             if (hasVisibleTaskbar(mainWindow)) {
                 cropBounds = new Rect(mActivityRecord.getBounds());
+
+                // Rounded corners should be displayed above the taskbar.
+                // It is important to call adjustBoundsForTaskbarUnchecked before offsetTo
+                // because taskbar bounds are in screen coordinates
+                adjustBoundsForTaskbarUnchecked(mainWindow, cropBounds);
+
                 // Activity bounds are in screen coordinates while (0,0) for activity's surface
                 // control is at the top left corner of an app window so offsetting bounds
                 // accordingly.
                 cropBounds.offsetTo(0, 0);
-                // Rounded corners should be displayed above the taskbar.
-                adjustBoundsForTaskbarUnchecked(mainWindow, cropBounds);
             }
 
             transaction
diff --git a/services/tests/wmtests/src/com/android/server/wm/SizeCompatTests.java b/services/tests/wmtests/src/com/android/server/wm/SizeCompatTests.java
index 181e81d70dfa2..06eea298600c1 100644
--- a/services/tests/wmtests/src/com/android/server/wm/SizeCompatTests.java
+++ b/services/tests/wmtests/src/com/android/server/wm/SizeCompatTests.java
@@ -25,6 +25,7 @@ import static android.content.pm.ActivityInfo.SCREEN_ORIENTATION_UNSPECIFIED;
 import static android.content.res.Configuration.ORIENTATION_LANDSCAPE;
 import static android.content.res.Configuration.ORIENTATION_PORTRAIT;
 import static android.provider.DeviceConfig.NAMESPACE_CONSTRAIN_DISPLAY_APIS;
+import static android.view.InsetsState.ITYPE_EXTRA_NAVIGATION_BAR;
 import static android.view.InsetsState.ITYPE_STATUS_BAR;
 import static android.view.Surface.ROTATION_0;
 import static android.view.Surface.ROTATION_180;
@@ -69,6 +70,7 @@ import static org.mockito.ArgumentMatchers.same;
 import static org.mockito.Mockito.atLeastOnce;
 import static org.mockito.Mockito.clearInvocations;
 import static org.mockito.Mockito.doCallRealMethod;
+import static org.mockito.Mockito.times;
 
 import android.annotation.Nullable;
 import android.app.ActivityManager;
@@ -84,6 +86,7 @@ import android.os.UserHandle;
 import android.platform.test.annotations.Presubmit;
 import android.provider.DeviceConfig;
 import android.provider.DeviceConfig.Properties;
+import android.view.InsetsSource;
 import android.view.InsetsVisibilities;
 import android.view.WindowManager;
 
@@ -103,6 +106,9 @@ import org.junit.Rule;
 import org.junit.Test;
 import org.junit.rules.TestRule;
 import org.junit.runner.RunWith;
+import org.mockito.ArgumentCaptor;
+
+import java.util.List;
 
 /**
  * Tests for Size Compatibility mode.
@@ -2368,6 +2374,48 @@ public class SizeCompatTests extends WindowTestsBase {
                 any(InsetsVisibilities.class), isNull(), eq(expectedLetterboxDetails));
     }
 
+    @Test
+    public void testLetterboxDetailsForTaskBar_letterboxNotOverlappingTaskBar() {
+        mAtm.mDevEnableNonResizableMultiWindow = true;
+        final int screenHeight = 2200;
+        final int screenWidth = 1400;
+        final int taskbarHeight = 200;
+        setUpDisplaySizeWithApp(screenWidth, screenHeight);
+
+        final TestSplitOrganizer organizer =
+                new TestSplitOrganizer(mAtm, mActivity.getDisplayContent());
+
+        // Move first activity to split screen which takes half of the screen.
+        organizer.mPrimary.setBounds(0, screenHeight / 2, screenWidth, screenHeight);
+        organizer.putTaskToPrimary(mTask, true);
+
+        final InsetsSource navSource = new InsetsSource(ITYPE_EXTRA_NAVIGATION_BAR);
+        navSource.setFrame(new Rect(0, screenHeight - taskbarHeight, screenWidth, screenHeight));
+
+        mActivity.mWmService.mLetterboxConfiguration.setLetterboxActivityCornersRadius(15);
+
+        final WindowState w1 = addWindowToActivity(mActivity);
+        w1.mAboveInsetsState.addSource(navSource);
+
+        // Prepare unresizable activity with max aspect ratio
+        prepareUnresizable(mActivity, /* maxAspect */ 1.1f, SCREEN_ORIENTATION_UNSPECIFIED);
+
+        // Refresh the letterboxes
+        mActivity.mRootWindowContainer.performSurfacePlacement();
+
+        final ArgumentCaptor<Rect> cropCapturer = ArgumentCaptor.forClass(Rect.class);
+        verify(mTransaction, times(2)).setWindowCrop(
+                eq(w1.getSurfaceControl()),
+                cropCapturer.capture()
+        );
+        final List<Rect> capturedCrops = cropCapturer.getAllValues();
+
+        final int expectedHeight = screenHeight / 2 - taskbarHeight;
+        assertEquals(2, capturedCrops.size());
+        assertEquals(expectedHeight, capturedCrops.get(0).bottom);
+        assertEquals(expectedHeight, capturedCrops.get(1).bottom);
+    }
+
     @Test
     public void testSplitScreenLetterboxDetailsForStatusBar_twoLetterboxedApps() {
         mAtm.mDevEnableNonResizableMultiWindow = true;