[System.Diagnostics.DiagnosticSource.Activity] Reset recorded flag when creating activity when not requested by sampler(s)

src/libraries/System.Diagnostics.DiagnosticSource/src/System/Diagnostics/Activity.cs

@@ -1244,6 +1244,12 @@ internal static Activity Create(ActivitySource source, string name, ActivityKind
             {
                 activity.ActivityTraceFlags |= ActivityTraceFlags.Recorded;
             }
+            else
+            {
+                // Note: Recorded may be inherited from the parent so it needs
+                // to be cleared for the Activity being created when not desired
+                activity.ActivityTraceFlags &= ~ActivityTraceFlags.Recorded;
+            }
 
             if (startTime != default)
             {

src/libraries/System.Diagnostics.DiagnosticSource/tests/ActivitySourceTests.cs

@@ -286,6 +286,36 @@ public void EnsureRecordingTest()
             }).Dispose();
         }
 
+        [ConditionalFact(typeof(RemoteExecutor), nameof(RemoteExecutor.IsSupported))]
+        public void EnsureRecordingClearedTest()
+        {
+            RemoteExecutor.Invoke(() => {
+                Activity.ForceDefaultIdFormat = true;
+                Activity.DefaultIdFormat = ActivityIdFormat.W3C;
+
+                ActivitySource aSource = new ActivitySource("EnsureRecordingTest");
+
+                ActivityListener listener = new ActivityListener
+                {
+                    ShouldListenTo = (activitySource) => true,
+                    Sample = (ref ActivityCreationOptions<ActivityContext> activityOptions) => ActivitySamplingResult.PropagationData
+                };
+
+                ActivitySource.AddActivityListener(listener);
+
+                // Note: Remote parent is set as recorded
+                var parentContext = new ActivityContext(ActivityTraceId.CreateRandom(), ActivitySpanId.CreateRandom(), ActivityTraceFlags.Recorded, isRemote: true);
+
+                Activity a = aSource.StartActivity("RecordedActivity", ActivityKind.Internal, parentContext);
+                Assert.NotNull(a);
+
+                // Note: The sampler requests PropagationData so recorded should be removed
+                Assert.False(a.IsAllDataRequested);
+                Assert.False(a.Recorded);
+                Assert.False((a.Context.TraceFlags & ActivityTraceFlags.Recorded) != 0);
+            }).Dispose();
+        }
+
         [ConditionalFact(typeof(RemoteExecutor), nameof(RemoteExecutor.IsSupported))]
         public void TestExpectedListenersReturnValues()
         {