--- vfs_acl_xattr.c.orig	2009-10-19 14:00:02.000000000 -0700
+++ vfs_acl_xattr.c	2009-10-19 14:02:09.000000000 -0700
@@ -275,7 +275,8 @@
 *********************************************************************/
 
 static struct security_descriptor *default_file_sd(TALLOC_CTX *mem_ctx,
-						SMB_STRUCT_STAT *psbuf)
+						SMB_STRUCT_STAT *psbuf,
+						int force_inherit)
 {
 	struct dom_sid owner_sid, group_sid;
 	size_t sd_size;
@@ -290,10 +291,21 @@
 		return NULL;
 	}
 
+	/* If force_inherit is set, this means we are initializing the ACEs for
+	 * a container and we want the ACEs for owner_sid and "SYSTEM" to be
+	 * inheritable by their children (See Bug #6802). 
+	 */
+
 	init_sec_ace(&pace[0], &owner_sid, SEC_ACE_TYPE_ACCESS_ALLOWED,
-			SEC_RIGHTS_FILE_ALL, 0);
+			SEC_RIGHTS_FILE_ALL, (force_inherit ? 
+					     (SEC_ACE_FLAG_OBJECT_INHERIT|
+					     SEC_ACE_FLAG_CONTAINER_INHERIT) : 
+					     0));
 	init_sec_ace(&pace[1], &global_sid_System, SEC_ACE_TYPE_ACCESS_ALLOWED,
-			SEC_RIGHTS_FILE_ALL, 0);
+			SEC_RIGHTS_FILE_ALL, (force_inherit ? 
+						(SEC_ACE_FLAG_OBJECT_INHERIT|
+					     	SEC_ACE_FLAG_CONTAINER_INHERIT) :
+						0));
 
 	pacl = make_sec_acl(mem_ctx,
 				NT4_ACL_REVISION,
@@ -327,6 +339,7 @@
 	DATA_BLOB blob;
 	size_t size;
 	char *parent_name;
+	int force_inherit = 0;
 
 	if (!parent_dirname(ctx, fname, &parent_name, NULL)) {
 		return NT_STATUS_NO_MEMORY;
@@ -390,7 +403,28 @@
 		if (ret == -1) {
 			return map_nt_error_from_unix(errno);
 		}
-		psd = default_file_sd(ctx, &sbuf);
+
+		/* If we get here, we could have the following possibilities:
+		 *	1. No ACLs exist on the parent container.
+		 *	2. ACLs exist on the parent container but they were
+		 *	not inheritable.
+		 *
+		 *	Check to see if case #1 occurred.
+		 *
+		 */
+		if (container && 
+			(parent_desc == NULL || parent_desc->dacl == NULL)) {
+
+			/* If no parent descriptor exists, then there were
+			 * no ACLs on the parent and then we must create
+			 * the ACLs on this newly created folder so that they
+			 * will be inherited by their children (See Bug #6802).
+			 */
+			
+			force_inherit = 1;
+		} 
+
+		psd = default_file_sd(ctx, &sbuf, force_inherit);
 		if (!psd) {
 			return NT_STATUS_NO_MEMORY;
 		}