diff --git a/fs/xfs/libxfs/xfs_ialloc.c b/fs/xfs/libxfs/xfs_ialloc.c
index 9a18c0b..6451a80 100644
--- a/fs/xfs/libxfs/xfs_ialloc.c
+++ b/fs/xfs/libxfs/xfs_ialloc.c
@@ -1076,13 +1076,24 @@
 }
 
 /*
- * Return the offset of the first free inode in the record.
+ * Return the offset of the first free inode in the record. If the inode chunk
+ * is sparsely allocated, we convert the record holemask to inode granularity
+ * and mask off the unallocated regions from the inode free mask.
  */
 STATIC int
 xfs_inobt_first_free_inode(
 	struct xfs_inobt_rec_incore	*rec)
 {
-	return xfs_lowbit64(rec->ir_free);
+	xfs_inofree_t			realfree;
+
+	/* if there are no holes, return the first available offset */
+	if (!xfs_inobt_issparse(rec->ir_holemask))
+		return xfs_lowbit64(rec->ir_free);
+
+	realfree = xfs_inobt_irec_to_allocmask(rec);
+	realfree &= rec->ir_free;
+
+	return xfs_lowbit64(realfree);
 }
 
 /*