diff --git a/cobc/ChangeLog b/cobc/ChangeLog
index 8c5853b8e..03b6b65b0 100644
--- a/cobc/ChangeLog
+++ b/cobc/ChangeLog
@@ -52,6 +52,16 @@
 
 	* pplex.l (cb_text_list): prevent duplicates
 
+2024-08-30  Ammar Almorsi <ammaralmorsi@gmail.com>
+
+	BUG #961: Nested Elements Mishandled Despite 'with attributes' Specification
+	* tree.c (set_ml_attrs_and_children): Enhanced the function to handle
+	  the case where a child has attributes
+	* codegen.c (output_ml_suppress_checks): Modified the starting point
+	  to start from the last attribute if present
+	* codegen.c (get_prev_ml_tree_entry): Removed the fallback case to
+	  prevent infinite loops
+
 2024-08-28  David Declerck <david.declerck@ocamlpro.com>
 
 	* tree.c (char_to_precedence_idx, get_char_type_description, valid_char_order):
diff --git a/cobc/codegen.c b/cobc/codegen.c
index c46d67f24..2710761f8 100644
--- a/cobc/codegen.c
+++ b/cobc/codegen.c
@@ -3485,8 +3485,6 @@ get_prev_ml_tree_entry (const struct cb_ml_generate_tree * const s)
 		} else {
 			return s->prev_sibling;
 		}
-	} else if (s->attrs) {
-		return get_last_attr (s);
 	} else if (s->parent) {
 		return s->parent;
 	} else {
@@ -8342,14 +8340,14 @@ output_ml_suppress_checks (struct cb_ml_suppress_checks * const suppress_checks)
 	struct cb_ml_generate_tree	*tree;
 
 	/*
-	  To resolve dependency problems, start from last child of last element.
+	  To resolve dependency problems, start from last child/attribute of last element.
 	*/
-	if (orig_tree->children) {
+	tree = orig_tree;
+	if (tree->children) {
 		tree = get_last_child (orig_tree);
-	} else if (orig_tree->attrs) {
+	}
+	if (tree->attrs) {
 		tree = get_last_attr (orig_tree);
-	} else {
-		tree = orig_tree;
 	}
 
 	for (;;) {
diff --git a/cobc/tree.c b/cobc/tree.c
index 0e2f9bb18..9ae64d219 100644
--- a/cobc/tree.c
+++ b/cobc/tree.c
@@ -1300,10 +1300,18 @@ set_ml_attrs_and_children (struct cb_field *record, const int children_are_attrs
 			continue;
 		}
 
-		child_tree_or_null = cb_build_ml_tree (child, 0,
-							children_are_attrs,
-							name_list, type_list,
-							suppress_list);
+		if (child->children) {
+			child_tree_or_null = cb_build_ml_tree (child, children_are_attrs,
+								0,
+								name_list, type_list,
+								suppress_list);
+		} else {
+			child_tree_or_null = cb_build_ml_tree (child, 0,
+								children_are_attrs,
+								name_list, type_list,
+								suppress_list);
+		}
+
 		if (!child_tree_or_null) {
 			continue;
 		}
diff --git a/tests/testsuite.src/run_ml.at b/tests/testsuite.src/run_ml.at
index 2b94f4bb2..5fa66f69a 100644
--- a/tests/testsuite.src/run_ml.at
+++ b/tests/testsuite.src/run_ml.at
@@ -124,6 +124,40 @@ AT_CHECK([$COBCRUN_DIRECT ./prog], [0], [], [])
 AT_CLEANUP
 
 
+AT_SETUP([XML GENERATE WITH ATTRIBUTES])
+AT_KEYWORDS([extensions])
+
+AT_SKIP_IF([test "$COB_HAS_XML2" = "no"])
+
+AT_DATA([prog.cob], [
+       IDENTIFICATION       DIVISION.
+       PROGRAM-ID.          prog.
+
+       DATA                 DIVISION.
+       WORKING-STORAGE      SECTION.
+       01  out              PIC X(200).
+       01  NSTD.
+           05  ATT1 pic x(4) value "ATT1".
+           05  CHLD1.
+               10  NSTD_ATT1 pic x(9) value "NSTD_ATT1".
+               10  NSTD_ATT2 pic x(9) value "NSTD_ATT2".
+           05  ATT2 pic x(4) value "ATT2".
+
+       PROCEDURE            DIVISION.
+           XML GENERATE out FROM NSTD WITH ATTRIBUTES
+           IF out <> '<NSTD ATT1="ATT1" ATT2="ATT2">'-
+                     '<CHLD1 NSTD_ATT1="NSTD_ATT1" '-
+                     'NSTD_ATT2="NSTD_ATT2"/></NSTD>'
+               DISPLAY 'Test 11 failed: ' FUNCTION TRIM (out)
+           END-IF
+           .
+])
+
+AT_CHECK([$COMPILE -fnot-reserved=ID prog.cob], [0], [], [])
+AT_CHECK([$COBCRUN_DIRECT ./prog], [0], [], [])
+AT_CLEANUP
+
+
 AT_SETUP([XML GENERATE SUPPRESS])
 AT_KEYWORDS([extensions])