--- a/net/minecraft/world/entity/animal/horse/AbstractChestedHorse.java
+++ b/net/minecraft/world/entity/animal/horse/AbstractChestedHorse.java
@@ -70,11 +70,19 @@
                 this.spawnAtLocation(Blocks.CHEST);
             }
 
-            this.setChest(false);
+            //this.setCarryingChest(false); // Paper - moved to post death logic
         }
 
     }
 
+    // Paper start
+    protected void postDeathDropItems(org.bukkit.event.entity.EntityDeathEvent event) {
+        if (this.hasChest() && (event == null || !event.isCancelled())) {
+            this.setChest(false);
+        }
+    }
+    // Paper end
+
     @Override
     public void addAdditionalSaveData(CompoundTag nbt) {
         super.addAdditionalSaveData(nbt);
