Lava bucket emptied and empty bucket filled with water lose NBT data in furnace

The bug

Buckets which get modified in a furnace lose their NBT data. Lava buckets can be used as fuel and turn into empty buckets and empty buckets can be used to collect the water when drying a sponge.

How to reproduce

1. Place a furnace and put a smeltable item in it

2. Put a named lava bucket as fuel in it

   /give @p minecraft:lava_bucket{display:{Name:"{\"text\":\"Named Lava Bucket\"}"}}

3. Hover over the created empty bucket
   → ❌ You will see that it has no name anymore

Code analysis

Based on 1.11.2 decompiled using MCP 9.35 rc1

The methods net.minecraft.tileentity.TileEntityFurnace.update() (lava bucket → empty bucket) and net.minecraft.tileentity.TileEntityFurnace.smeltItem() (empty bucket → water bucket) create a new item stack.