diff --git a/sycl/include/sycl/handler.hpp b/sycl/include/sycl/handler.hpp
index 7c50701c5af0e..3cf26b5432298 100644
--- a/sycl/include/sycl/handler.hpp
+++ b/sycl/include/sycl/handler.hpp
@@ -571,6 +571,9 @@ class __SYCL_EXPORT handler {
   /// object destruction.
   ///
   /// \return a SYCL event object representing the command group
+  ///
+  /// Note: in preview mode, handler.finalize() is expected to return
+  /// nullptr if the event is not needed (discarded).
 #ifdef __INTEL_PREVIEW_BREAKING_CHANGES
   detail::EventImplPtr finalize();
 #else
diff --git a/sycl/source/detail/queue_impl.hpp b/sycl/source/detail/queue_impl.hpp
index 34982e99ead92..d897bfc91b5ab 100644
--- a/sycl/source/detail/queue_impl.hpp
+++ b/sycl/source/detail/queue_impl.hpp
@@ -709,7 +709,11 @@ class queue_impl : public std::enable_shared_from_this<queue_impl> {
   }
 
 #ifdef __INTEL_PREVIEW_BREAKING_CHANGES
-#define parseEvent(arg) (arg)
+  inline const detail::EventImplPtr &
+  parseEvent(const detail::EventImplPtr &Event) {
+    assert(!Event || !Event->isDiscarded());
+    return Event;
+  }
 #else
   inline detail::EventImplPtr parseEvent(const event &Event) {
     const detail::EventImplPtr &EventImpl = getSyclObjImpl(Event);
diff --git a/sycl/source/detail/scheduler/commands.cpp b/sycl/source/detail/scheduler/commands.cpp
index 946ad402de46a..020e5b0743c22 100644
--- a/sycl/source/detail/scheduler/commands.cpp
+++ b/sycl/source/detail/scheduler/commands.cpp
@@ -3132,22 +3132,17 @@ ur_result_t ExecCGCommand::enqueueImpQueue() {
   auto RawEvents = getUrEvents(EventImpls);
   flushCrossQueueDeps(EventImpls, MWorkerQueue);
 
-  // We can omit creating a UR event and create a "discarded" event if the
-  // command has been explicitly marked as not needing an event, e.g. if the
-  // user did not ask for one, and there are no requirements.
-  bool DiscardUrEvent = MQueue && !MEventNeeded &&
-                        MQueue->supportsDiscardingPiEvents() &&
-                        MCommandGroup->getRequirements().size() == 0;
-
   ur_event_handle_t UREvent = nullptr;
-  ur_event_handle_t *Event = DiscardUrEvent ? nullptr : &UREvent;
-  detail::event_impl *EventImpl = DiscardUrEvent ? nullptr : MEvent.get();
+  ur_event_handle_t *Event = !MEventNeeded ? nullptr : &UREvent;
+  detail::event_impl *EventImpl = !MEventNeeded ? nullptr : MEvent.get();
 
   auto SetEventHandleOrDiscard = [&]() {
-    if (Event)
+    if (!MEventNeeded) {
+      assert(MEvent->isDiscarded());
+    } else {
+      assert(!MEvent->isDiscarded());
       MEvent->setHandle(*Event);
-    else
-      MEvent->setStateDiscarded();
+    }
   };
 
   switch (MCommandGroup->getType()) {
diff --git a/sycl/source/detail/scheduler/scheduler.cpp b/sycl/source/detail/scheduler/scheduler.cpp
index b84500dc65a96..fd5b2af0b338b 100644
--- a/sycl/source/detail/scheduler/scheduler.cpp
+++ b/sycl/source/detail/scheduler/scheduler.cpp
@@ -133,6 +133,14 @@ EventImplPtr Scheduler::addCG(
     }
     NewEvent = NewCmd->getEvent();
     NewEvent->setSubmissionTime();
+
+    // This is the last moment we can mark the event as discarded.
+    // Doing this during command execution would lead to incorrect
+    // event handling (as event would change it's state from non-discarded
+    // to discarded).
+    if (!EventNeeded) {
+      NewEvent->setStateDiscarded();
+    }
   }
 
   enqueueCommandForCG(NewEvent, AuxiliaryCmds);
diff --git a/sycl/source/detail/scheduler/scheduler.hpp b/sycl/source/detail/scheduler/scheduler.hpp
index a43e7546e9a6b..5ac668878bb9b 100644
--- a/sycl/source/detail/scheduler/scheduler.hpp
+++ b/sycl/source/detail/scheduler/scheduler.hpp
@@ -376,7 +376,8 @@ class Scheduler {
   /// directly to the queue.
   /// \param Dependencies Optional list of dependency
   /// sync points when enqueuing to a command buffer.
-  /// \return an event object to wait on for command group completion.
+  /// \return an event object to wait on for command group completion. It can
+  /// be a discarded event.
   EventImplPtr addCG(
       std::unique_ptr<detail::CG> CommandGroup, const QueueImplPtr &Queue,
       bool EventNeeded, ur_exp_command_buffer_handle_t CommandBuffer = nullptr,
diff --git a/sycl/source/handler.cpp b/sycl/source/handler.cpp
index a28f21c408f80..6377d457ae063 100644
--- a/sycl/source/handler.cpp
+++ b/sycl/source/handler.cpp
@@ -895,11 +895,15 @@ event handler::finalize() {
 #endif
   }
 
+  bool DiscardEvent = !impl->MEventNeeded && Queue &&
+                      Queue->supportsDiscardingPiEvents() &&
+                      CommandGroup->getRequirements().size() == 0;
+
   detail::EventImplPtr Event = detail::Scheduler::getInstance().addCG(
-      std::move(CommandGroup), Queue->shared_from_this(), impl->MEventNeeded);
+      std::move(CommandGroup), Queue->shared_from_this(), !DiscardEvent);
 
 #ifdef __INTEL_PREVIEW_BREAKING_CHANGES
-  MLastEvent = Event;
+  MLastEvent = DiscardEvent ? nullptr : Event;
 #else
   MLastEvent = detail::createSyclObjFromImpl<event>(Event);
 #endif