Invalid declarations emitted when using ZodObject from zod as return type of generic function

[mayorandrew]

Bug Report

🔎 Search Terms

zod, ZodObject, declaration, invalid declaration emit, extends infer T, union distribution, Type 'k' cannot be used to index type 'addQuestionMarks', skipLibCheck, error 2536, generic function return type

🕗 Version & Regression Information

Observed in all versions starting from 4.7. Tested on 4.7.4, 4.8.4, 4.9.5, 5.0.4, 5.1.3, 5.2.0-dev20230607. Works correctly on 4.6.4.

• This changed between versions 4.6.4 and 4.7.4
• This is the behavior in every version I tried, and I reviewed the full FAQ

⏯ Playground Link

The playground contains relevant simplified type definitions from zod library in an attempt to produce a minimal reproducible example.

Playground link with relevant code

💻 Code

export const buildSchema = <V extends string>(version: V): 
  objectOutputType<{ version: ZodLiteral<V>; }> => 
    ({}) as any;

Ignore ({}) as any, it is just to avoid writing function implementation.

🙁 Actual behavior

Code gets compiled into the following declaration:

export declare const buildSchema: <V extends string>(version: V) => addQuestionMarks<baseObjectOutputType<{
    version: ZodLiteral<V>;
}>, undefined extends V ? never : "version"> extends infer T ? { [k in keyof T]: addQuestionMarks<baseObjectOutputType<{
    version: ZodLiteral<V>;
}>, undefined extends V ? never : "version">[k]; } : never;

This declaration produces the following type error when copy-pasted back into TS playground:

Type 'k' cannot be used to index type 'addQuestionMarks<baseObjectOutputType<{ version: ZodLiteral<V>; }>, undefined extends V ? never : "version">'.(2536)

🙂 Expected behavior

The generated declaration should be valid.

For example, this would be a valid declaration:

export declare const buildSchema: <V extends string>(version: V) => addQuestionMarks<baseObjectOutputType<{
    version: ZodLiteral<V>;
}>, undefined extends V ? never : "version"> extends infer T ? { [k in keyof T]: T[k]; } : never;

4.6.4 produces declaration without extends infer T which is also valid:

export declare const buildSchema: <V extends string>(version: V) => { [k in keyof addQuestionMarks<baseObjectOutputType<{
    version: ZodLiteral<V>;
}>, undefined extends V ? never : "version">]: addQuestionMarks<baseObjectOutputType<{
    version: ZodLiteral<V>;
}>, undefined extends V ? never : "version">[k]; };

Related issues:

• Function involving FlatArray is transformed in declaration in an incompatible type. #49572
• Invalid declarations for inlined distributive types in 4.7 #49591
• Generic schema builder compiles into invalid type definitions colinhacks/zod#2260
• TSC generates wrong typedefs from zod  colinhacks/zod#1986

Special thanks to @KaoSDlanor for posting an issue in the zod repo than inspired me to write this one and @pivstone for helping me with the investigation