diff --git a/ethchain/state.go b/ethchain/state.go
index 5d023df7b..6abf21c39 100644
--- a/ethchain/state.go
+++ b/ethchain/state.go
@@ -67,11 +67,19 @@ func (self *State) Empty() {
 func (self *State) Update() {
 	for _, stateObject := range self.stateObjects {
 		if stateObject.remove {
-			self.trie.Delete(string(stateObject.Address()))
+			self.DeleteStateObject(stateObject)
 		} else {
+			println(ethutil.Bytes2Hex(stateObject.Address()))
 			self.UpdateStateObject(stateObject)
 		}
 	}
+
+	// FIXME trie delete is broken
+	valid, t2 := ethtrie.ParanoiaCheck(self.trie)
+	if !valid {
+		self.trie = t2
+	}
+
 }
 
 // Purges the current trie.
@@ -100,6 +108,12 @@ func (self *State) UpdateStateObject(stateObject *StateObject) {
 	self.manifest.AddObjectChange(stateObject)
 }
 
+func (self *State) DeleteStateObject(stateObject *StateObject) {
+	self.trie.Delete(string(stateObject.Address()))
+
+	delete(self.stateObjects, string(stateObject.Address()))
+}
+
 func (self *State) GetStateObject(addr []byte) *StateObject {
 	stateObject := self.stateObjects[string(addr)]
 	if stateObject != nil {
diff --git a/ethchain/state_object.go b/ethchain/state_object.go
index 5a43de35c..2c7f36e65 100644
--- a/ethchain/state_object.go
+++ b/ethchain/state_object.go
@@ -84,6 +84,7 @@ func NewStateObjectFromBytes(address, data []byte) *StateObject {
 
 func (self *StateObject) MarkForDeletion() {
 	self.remove = true
+	statelogger.Infof("%x: #%d %v (deletion)\n", self.Address(), self.Nonce, self.Amount)
 }
 
 func (c *StateObject) GetAddr(addr []byte) *ethutil.Value {
diff --git a/ethchain/state_transition.go b/ethchain/state_transition.go
index 10a795cb8..314d858f2 100644
--- a/ethchain/state_transition.go
+++ b/ethchain/state_transition.go
@@ -176,15 +176,23 @@ func (self *StateTransition) TransitionState() (err error) {
 		return
 	}
 
-	receiver = self.Receiver()
+	/* FIXME
+	 * If tx goes TO "0", goes OOG during init, reverse changes, but initial endowment should happen. The ether is lost forever
+	 */
+	var snapshot *State
 
 	// If the receiver is nil it's a contract (\0*32).
-	if receiver == nil {
+	if tx.CreatesContract() {
+		snapshot = self.state.Copy()
+
 		// Create a new state object for the contract
 		receiver = self.MakeStateObject(self.state, tx)
+		self.rec = receiver
 		if receiver == nil {
 			return fmt.Errorf("Unable to create contract")
 		}
+	} else {
+		receiver = self.Receiver()
 	}
 
 	// Transfer value from sender to receiver
@@ -192,7 +200,9 @@ func (self *StateTransition) TransitionState() (err error) {
 		return
 	}
 
-	snapshot := self.state.Copy()
+	if snapshot == nil {
+		snapshot = self.state.Copy()
+	}
 
 	// Process the init code and create 'valid' contract
 	if IsContractAddr(self.receiver) {