diff --git a/Src/Newtonsoft.Json.Tests/Serialization/SerializationErrorHandlingTests.cs b/Src/Newtonsoft.Json.Tests/Serialization/SerializationErrorHandlingTests.cs
index f0f7e0a7..97b6227b 100644
--- a/Src/Newtonsoft.Json.Tests/Serialization/SerializationErrorHandlingTests.cs
+++ b/Src/Newtonsoft.Json.Tests/Serialization/SerializationErrorHandlingTests.cs
@@ -52,6 +52,54 @@ namespace Newtonsoft.Json.Tests.Serialization
     [TestFixture]
     public class SerializationErrorHandlingTests : TestFixtureBase
     {
+        [Test]
+        public void ErrorHandlingMetadata()
+        {
+            List<Exception> errors = new List<Exception>();
+
+            AAA a2 = JsonConvert.DeserializeObject<AAA>(@"{""MyTest"":{""$type"":""<Namespace>.JsonTest+MyTest2, <Assembly>""}}", new JsonSerializerSettings
+            {
+                TypeNameHandling = TypeNameHandling.Auto,
+                Error = (object sender, Json.Serialization.ErrorEventArgs e) =>
+                {
+                    errors.Add(e.ErrorContext.Error);
+                    e.ErrorContext.Handled = true;
+                }
+            });
+
+            Assert.IsNotNull(a2);
+            Assert.AreEqual(1, errors.Count);
+            Assert.AreEqual("Error resolving type specified in JSON '<Namespace>.JsonTest+MyTest2, <Assembly>'. Path 'MyTest.$type', line 1, position 61.", errors[0].Message);
+        }
+
+        [Test]
+        public void ErrorHandlingMetadata_TopLevel()
+        {
+            List<Exception> errors = new List<Exception>();
+
+            JObject a2 = (JObject)JsonConvert.DeserializeObject(@"{""$type"":""<Namespace>.JsonTest+MyTest2, <Assembly>""}", new JsonSerializerSettings
+            {
+                TypeNameHandling = TypeNameHandling.Auto,
+                Error = (object sender, Json.Serialization.ErrorEventArgs e) =>
+                {
+                    errors.Add(e.ErrorContext.Error);
+                    e.ErrorContext.Handled = true;
+                }
+            });
+
+            Assert.IsNull(a2);
+            Assert.AreEqual(1, errors.Count);
+            Assert.AreEqual("Error resolving type specified in JSON '<Namespace>.JsonTest+MyTest2, <Assembly>'. Path '$type', line 1, position 51.", errors[0].Message);
+        }
+
+        public class AAA
+        {
+            public ITest MyTest { get; set; }
+        }
+
+        public interface ITest { }
+        public class MyTest : ITest { }
+
         public class MyClass1
         {
             [JsonProperty("myint")]
diff --git a/Src/Newtonsoft.Json/Serialization/JsonSerializerInternalReader.cs b/Src/Newtonsoft.Json/Serialization/JsonSerializerInternalReader.cs
index 991ccb70..0c64e0f2 100644
--- a/Src/Newtonsoft.Json/Serialization/JsonSerializerInternalReader.cs
+++ b/Src/Newtonsoft.Json/Serialization/JsonSerializerInternalReader.cs
@@ -2408,7 +2408,7 @@ namespace Newtonsoft.Json.Serialization
                         {
                             if (IsErrorHandled(newObject, contract, memberName, reader as IJsonLineInfo, reader.Path, ex))
                             {
-                                HandleError(reader, true, initialDepth);
+                                HandleError(reader, true, initialDepth - 1);
                             }
                             else
                             {