What indentation is required for a case statement within a let statement?

The basic indentation rules are actually quite simple:

  • after the keywords which start a block (where,let,do,case .. of) note down the column where the next word starts (which might be in the next line)
  • lines indented exactly as that are new entries in the block
  • lines indented more than that continue the previous entry
  • a line indented less than that ends the block right before that line
  • in nested blocks, apply the rules to the outermost block, first

Tricky example:

1 + case x of
      A -> 45  -- note where "A" starts
      B -> 10  -- same indentation: another case branch
       + 2     -- more indented, so it's "10+2"
     + 10      -- less indented, so it's "1+(case ...)+10"

In your case,

let b' = case True of
    True -> True
    False -> False

we have two nested blocks, one for let and one for case..of. The let blocks uses the column of b'. The case..of block tries to reuse the same column, but we need to apply the rules the the outermost block, first. So the True -> ... line is actually a new entry of the let block. This triggers a parsing error.

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