diff --git a/vp10/decoder/decodeframe.c b/vp10/decoder/decodeframe.c
index c0fbc49..2bfedf6 100644
--- a/vp10/decoder/decodeframe.c
+++ b/vp10/decoder/decodeframe.c
@@ -2109,8 +2109,8 @@
 
   setup_segmentation_dequant(cm);
 #if CONFIG_MISC_FIXES
-  cm->tx_mode = (xd->lossless[0]) ? ONLY_4X4
-                                  : read_tx_mode(rb);
+  cm->tx_mode = (!cm->seg.enabled && xd->lossless[0]) ? ONLY_4X4
+                                                      : read_tx_mode(rb);
   cm->reference_mode = read_frame_reference_mode(cm, rb);
 #endif
 
diff --git a/vp10/encoder/bitstream.c b/vp10/encoder/bitstream.c
index 477752a..d4b8c36 100644
--- a/vp10/encoder/bitstream.c
+++ b/vp10/encoder/bitstream.c
@@ -1261,7 +1261,7 @@
   encode_quantization(cm, wb);
   encode_segmentation(cm, xd, wb);
 #if CONFIG_MISC_FIXES
-  if (xd->lossless[0])
+  if (!cm->seg.enabled && xd->lossless[0])
     cm->tx_mode = TX_4X4;
   else
     write_txfm_mode(cm->tx_mode, wb);