Addressing CR comments.

1. Writing: Omit null value for nested resource.
2. Reading:
    a). Restore annotated property whose value is omitted on the wire (result is null property value with annotation).
    b). Restore dynamic property.
3. Misc updates.

src/Microsoft.OData.Core/JsonLight/ODataJsonLightPropertySerializer.cs

@@ -101,7 +101,9 @@ internal void WriteTopLevelProperty(ODataProperty property)
         /// Whether the properties are being written for complex value. Also used for detecting whether stream properties
         /// are allowed as named stream properties should only be defined on ODataResource instances
         /// </param>
-        /// <param name="omitNullValues">Whether to omit null property values.</param>
+        /// <param name="omitNullValues">Whether to omit null property values.
+        /// Value should be 'false' if writing delta payload, otherwise derived from request preference header.
+        /// </param>
         /// <param name="duplicatePropertyNameChecker">The DuplicatePropertyNameChecker to use.</param>
         internal void WriteProperties(
             IEdmStructuredType owningType,
@@ -168,7 +170,9 @@ private bool IsOpenProperty(ODataProperty property)
         /// <param name="isTopLevel">true when writing a top-level property; false for nested properties.</param>
         /// <param name="allowStreamProperty">Should pass in true if we are writing a property of an ODataResource instance, false otherwise.
         /// Named stream properties should only be defined on ODataResource instances.</param>
-        /// <param name="omitNullValues">whether to omit null property values for writing.</param>
+        /// <param name="omitNullValues"> Whether to omit null property values for writing.
+        /// Value should be 'false' if writing top level properties or delta payload, otherwise derived from request preference header.
+        /// </param>
         /// <param name="duplicatePropertyNameChecker">The DuplicatePropertyNameChecker to use.</param>
         [SuppressMessage("Microsoft.Maintainability", "CA1506:AvoidExcessiveClassCoupling", Justification = "Splitting the code would make the logic harder to understand; class coupling is only slightly above threshold.")]
         private void WriteProperty(
@@ -199,6 +203,14 @@ private void WriteProperty(
                 this.currentPropertyInfo = this.JsonLightOutputContext.PropertyCacheHandler.GetProperty(propertyName, owningType);
             }
 
+
+            if (currentPropertyInfo.MetadataType.IsUndeclaredProperty)
+            {
+                WriteODataTypeAnnotation(property, isTopLevel);
+            }
+
+            WriteInstanceAnnotation(property, isTopLevel, currentPropertyInfo.MetadataType.IsUndeclaredProperty);
+
             // Optimization for null values:
             // If no validation is required, we don't need property serialization info and could try to skip writing null property right away
             // If this property is top-level, we cannot optimize here due to backward-compatibility requirement for OData-6.x.
@@ -216,13 +228,6 @@ private void WriteProperty(
 
             duplicatePropertyNameChecker.ValidatePropertyUniqueness(property);
 
-            if (currentPropertyInfo.MetadataType.IsUndeclaredProperty)
-            {
-                WriteODataTypeAnnotation(property, isTopLevel);
-            }
-
-            WriteInstanceAnnotation(property, isTopLevel, currentPropertyInfo.MetadataType.IsUndeclaredProperty);
-
             // handle ODataUntypedValue
             ODataUntypedValue untypedValue = value as ODataUntypedValue;
             if (untypedValue != null)

src/Microsoft.OData.Core/JsonLight/ODataJsonLightReader.cs

@@ -2267,8 +2267,7 @@ private void RestoreOmittedNullValues()
         {
             // Restore omitted null value only when processing response and when
             // Preference header omit-values=nulls is specified.
-            if (this.jsonLightInputContext.ReadingResponse
-                && this.jsonLightInputContext.MessageReaderSettings.NullValuesOmitted)
+            if (ShouldRestoreNullValues())
             {
                 IODataJsonLightReaderResourceState resourceState = this.CurrentResourceState;
                 IEdmStructuredType edmStructuredType = resourceState.ResourceType;
@@ -2291,62 +2290,105 @@ private void RestoreOmittedNullValues()
                         }
                         else
                         {
-                            // Partial subtree. Combine navigation properties and selected properties at the node with distinct.
-                            selectedProperties =
-                                resourceState.SelectedProperties.GetSelectedNavigationProperties(edmStructuredType)
-                                as IEnumerable<IEdmProperty>;
-                            selectedProperties = selectedProperties.Concat(
-                                resourceState.SelectedProperties.GetSelectedProperties(edmStructuredType))
-                                .Distinct();
+                           // Partial subtree.
+                           selectedProperties = resourceState.SelectedProperties.GetSelectedProperties(edmStructuredType);
+                        }
+
+                        // All dynamic properties: null value restoration.
+                        foreach (string name in resourceState.SelectedProperties.GetSelectedDynamicProperties(edmStructuredType))
+                        {
+                            RestoreNullODataProperty(name, resourceState);
                         }
 
                         foreach (IEdmProperty currentProperty in selectedProperties)
                         {
                             Debug.Assert(currentProperty.Type != null, "currentProperty.Type != null");
-                            if (!currentProperty.Type.IsNullable || currentProperty.PropertyKind == EdmPropertyKind.Navigation)
+
+                            // 1. Skip declared properties that are not null-able types.
+                            // 2. Don't need to restored null value for resources or nested resources omitted on the wire, since
+                            // reader just don't report them anyway.
+                            // 3. Skip properties (including navigation properties) that have been read.
+                            if (!IsNullableProperty(currentProperty)
+                                || resource.Properties.Any(p => p.Name.Equals(currentProperty.Name, StringComparison.Ordinal))
+                                || resourceState.NavigationPropertiesRead.Contains(currentProperty.Name))
                             {
-                                // Skip declared properties that are not null-able types, and declared navigation properties
-                                // which are specified using odata.navigationlink annotations whose absence stand for null values.
                                 continue;
                             }
 
-                            // Response should be generated using case sensitive, matching EDM defined by metadata.
-                            // In order to find potential omitted properties, need to check
-                            // resource properties read and navigation properties read.
-                            if (!resource.Properties.Any(
-                                p => p.Name.Equals(currentProperty.Name, StringComparison.Ordinal))
-                                && !resourceState.NavigationPropertiesRead.Contains(currentProperty.Name))
-                            {
-                                // Add null value to omitted property declared in the type
-                                ODataProperty property = new ODataProperty
-                                {
-                                    Name = currentProperty.Name,
-                                    Value = new ODataNullValue()
-                                };
-
-                                // Mark as processed, will throw if duplicate is detected.
-                                resourceState.PropertyAndAnnotationCollector.MarkPropertyAsProcessed(property.Name);
-
-                                ReadOnlyEnumerable<ODataProperty> readonlyEnumerable =
-                                    resource.Properties as ReadOnlyEnumerable<ODataProperty>;
-                                if (readonlyEnumerable != null)
-                                {
-                                    // For non-entity resource, add the property underneath the read-only enumerable.
-                                    resource.Properties.ConcatToReadOnlyEnumerable("Properties", property);
-                                }
-                                else
-                                {
-                                    // For entity resource, concatenate the property to original enumerable.
-                                    resource.Properties =
-                                        resource.Properties.Concat(new List<ODataProperty>() { property });
-                                }
-                            }
+                            RestoreNullODataProperty(currentProperty.Name, resourceState);
                         }
                     }
                 }
             }
         }
 
+        private static bool IsNullableProperty(IEdmProperty property)
+        {
+            bool isNullableProperty = true;
+
+            if (!property.Type.IsNullable)
+            {
+                // From customized model whether it is null-able
+                isNullableProperty = false;
+            }
+            else
+            {
+                // From definition type kind.
+                switch (property.Type.Definition.TypeKind)
+                {
+                    case EdmTypeKind.Complex:            // complex types
+                    case EdmTypeKind.Entity:
+                    case EdmTypeKind.EntityReference:
+                    case EdmTypeKind.Path:
+                        isNullableProperty = false;
+                        break;
+
+                    case EdmTypeKind.Collection:
+                        IEdmCollectionType collectionType = property.Type.Definition as EdmCollectionType;
+                        isNullableProperty = collectionType.ElementType.IsNullable;
+                        break;
+
+                    default:
+                        break;
+                }
+            }
+
+            return isNullableProperty;
+        }
+
+        /// <summary>
+        /// Restore the null property value in the resource.
+        /// </summary>
+        /// <param name="nullPropertyName">Name of the property to restore the null value.</param>
+        /// <param name="resourceState">The resource state.</param>
+        private static void RestoreNullODataProperty(string nullPropertyName, IODataJsonLightReaderResourceState resourceState)
+        {
+            // Add null value to omitted property declared in the type
+            ODataProperty property = new ODataProperty
+            {
+                Name = nullPropertyName,
+                Value = new ODataNullValue()
+            };
+
+            // Mark as processed, will throw if duplicate is detected.
+            resourceState.PropertyAndAnnotationCollector.MarkPropertyAsProcessed(property.Name);
+            ODataResourceBase resource = resourceState.Resource;
+
+            ReadOnlyEnumerable<ODataProperty> readonlyEnumerable =
+                resource.Properties as ReadOnlyEnumerable<ODataProperty>;
+            if (readonlyEnumerable != null)
+            {
+                // For non-entity resource, add the property underneath the read-only enumerable.
+                resource.Properties.ConcatToReadOnlyEnumerable("Properties", property);
+            }
+            else
+            {
+                // For entity resource, concatenate the property to original enumerable.
+                resource.Properties =
+                    resource.Properties.Concat(new List<ODataProperty>() { property });
+            }
+        }
+
         /// <summary>
         /// Get all properties defined by the EDM structural type and its base types.
         /// </summary>

src/Microsoft.OData.Core/JsonLight/ODataJsonLightResourceDeserializer.cs

@@ -998,6 +998,10 @@ internal ODataJsonLightReaderNestedResourceInfo ReadPropertyWithoutValue(IODataJ
                         ODataStreamReferenceValue streamPropertyValue = this.ReadStreamPropertyValue(resourceState, propertyName);
                         AddResourceProperty(resourceState, edmProperty.Name, streamPropertyValue);
                     }
+                    else if (this.JsonLightInputContext.ShouldRestoreNullValues())
+                    {
+                        AddResourceProperty(resourceState, propertyName, new ODataNullValue());
+                    }
                     else
                     {
                         throw new ODataException(ODataErrorStrings.ODataJsonLightResourceDeserializer_PropertyWithoutValueWithWrongType(propertyName, propertyTypeReference.FullName()));
@@ -1320,7 +1324,18 @@ private ODataJsonLightReaderNestedResourceInfo InnerReadUndeclaredProperty(IODat
             // Property without a value can't be ignored if we don't know what it is.
             if (!propertyWithValue)
             {
-                throw new ODataException(ODataErrorStrings.ODataJsonLightResourceDeserializer_OpenPropertyWithoutValue(propertyName));
+                if (this.JsonLightInputContext.ShouldRestoreNullValues())
+                {
+                    // For case of property without values that are possibly omitted, restore omitted null value
+                    // and return nested resource as null.
+                    AddResourceProperty(resourceState, propertyName, new ODataNullValue());
+                    return null;
+                }
+                else
+                {
+                    throw new ODataException(
+                        ODataErrorStrings.ODataJsonLightResourceDeserializer_OpenPropertyWithoutValue(propertyName));
+                }
             }
 
             object propertyValue = null;

src/Microsoft.OData.Core/JsonLight/ODataJsonLightWriter.cs

@@ -270,15 +270,27 @@ protected override void StartResource(ODataResource resource)
                     }
 
                     this.jsonLightResourceSerializer.InstanceAnnotationWriter.WriteInstanceAnnotations(parentNavLink.GetInstanceAnnotations(), parentNavLink.Name);
-                }
 
-                // Write the property name of an expanded navigation property to start the value.
-                this.jsonWriter.WriteName(parentNavLink.Name);
+                    if (!this.ShouldOmitNullValues())
+                    {
+                        // Write the property name of an expanded navigation property to start the value per preference setting.
+                        this.jsonWriter.WriteName(parentNavLink.Name);
+                    }
+                }
+                else
+                {
+                    // Write the property name of an expanded navigation property to start the value.
+                    this.jsonWriter.WriteName(parentNavLink.Name);
+                }
             }
 
             if (resource == null)
             {
-                this.jsonWriter.WriteValue((string)null);
+                if (!this.ShouldOmitNullValues())
+                {
+                    this.jsonWriter.WriteValue((string)null);
+                }
+
                 return;
             }
 

src/Microsoft.OData.Core/Microsoft.OData.Core.cs

@@ -272,9 +272,6 @@ internal sealed class TextRes {
         internal const string HttpHeaderValueLexer_FailedToReadTokenOrQuotedString = "HttpHeaderValueLexer_FailedToReadTokenOrQuotedString";
         internal const string HttpHeaderValueLexer_InvalidSeparatorAfterQuotedString = "HttpHeaderValueLexer_InvalidSeparatorAfterQuotedString";
         internal const string HttpHeaderValueLexer_EndOfFileAfterSeparator = "HttpHeaderValueLexer_EndOfFileAfterSeparator";
-
-        internal const string HttpPreferenceHeader_InvalidValueForToken = "HttpPreferenceHeader_InvalidValueForToken";
-
         internal const string MediaType_EncodingNotSupported = "MediaType_EncodingNotSupported";
         internal const string MediaTypeUtils_DidNotFindMatchingMediaType = "MediaTypeUtils_DidNotFindMatchingMediaType";
         internal const string MediaTypeUtils_CannotDetermineFormatFromContentType = "MediaTypeUtils_CannotDetermineFormatFromContentType";

src/Microsoft.OData.Core/Microsoft.OData.Core.txt

@@ -241,9 +241,6 @@ HttpHeaderValueLexer_TokenExpectedButFoundQuotedString=An error occurred when pa
 HttpHeaderValueLexer_FailedToReadTokenOrQuotedString=An error occurred when parsing the HTTP header '{0}'. The header value '{1}' is incorrect at position '{2}' because a token or a quoted-string is expected at this position but were not found.
 HttpHeaderValueLexer_InvalidSeparatorAfterQuotedString=An error occurred when parsing the HTTP header '{0}'. The header value '{1}' is incorrect at position '{2}' because '{3}' is not a valid separator after a quoted-string.
 HttpHeaderValueLexer_EndOfFileAfterSeparator=An error occurred when parsing the HTTP header '{0}'. The header value '{1}' is incorrect at position '{2}' because the header value should not end with the separator '{3}'.
-
-HttpPreferenceHeader_InvalidValueForToken=The value '{0}' is not a valid value for OData token '{1}' in HTTP Prefer or Preference-Applied headers.
-
 MediaType_EncodingNotSupported=The character set '{0}' is not supported.
 
 MediaTypeUtils_DidNotFindMatchingMediaType=A supported MIME type could not be found that matches the acceptable MIME types for the request. The supported type(s) '{0}' do not match any of the acceptable MIME types '{1}'.

src/Microsoft.OData.Core/ODataInputContext.cs

@@ -646,6 +646,15 @@ internal Uri ResolveUri(Uri baseUri, Uri payloadUri)
             return null;
         }
 
+        /// <summary>
+        /// Returns whether properties of null values should be restored when materializing the payload.
+        /// </summary>
+        /// <returns>Return true to restore null-value properties; false otherwise.</returns>
+        internal bool ShouldRestoreNullValues()
+        {
+            return this.ReadingResponse && this.MessageReaderSettings.NullValuesOmitted;
+        }
+
         /// <summary>
         /// Perform the actual cleanup work.
         /// </summary>

src/Microsoft.OData.Core/ODataMessageReader.cs

@@ -169,15 +169,14 @@ public ODataMessageReader(IODataResponseMessage responseMessage, ODataMessageRea
             this.model = model ?? GetModel(this.container);
             this.edmTypeResolver = new EdmTypeReaderResolver(this.model, this.settings.ClientCustomTypeResolver);
 
-            // Whether null values were omitted in the response.
+            // Whether null values were omitted in the response, false by default.
             this.settings.NullValuesOmitted = false;
-            string omitValuePreferenceApplied = responseMessage.PreferenceAppliedHeader().OmitValues;
-            if (omitValuePreferenceApplied != null)
+            if (string.Equals(responseMessage.PreferenceAppliedHeader().OmitValues, ODataConstants.OmitValuesNulls,
+                StringComparison.OrdinalIgnoreCase))
             {
                 // If the Preference-Applied header's omit-values parameter is present in the response, its value should
                 // be applied to the reader's setting.
-                this.settings.NullValuesOmitted =
-                    omitValuePreferenceApplied.Equals(ODataConstants.OmitValuesNulls, StringComparison.OrdinalIgnoreCase);
+                this.settings.NullValuesOmitted = true;
             }
 
             // If the Preference-Applied header on the response message contains an annotation filter, we set the filter

src/Microsoft.OData.Core/ODataReaderCore.cs

@@ -664,6 +664,16 @@ protected void DecreaseResourceDepth()
             this.currentResourceDepth--;
         }
 
+
+        /// <summary>
+        /// Returns whether properties of null values should be restored when materializing the payload.
+        /// </summary>
+        /// <returns>Return true to restore null-value properties; false otherwise.</returns>
+        protected bool ShouldRestoreNullValues()
+        {
+            return this.inputContext.ShouldRestoreNullValues();
+        }
+
         /// <summary>
         /// Reads the next <see cref="ODataItem"/> from the message payload.
         /// </summary>