7-dioxygenated 3(2H)-isoquinolones from 2-hydroxymethyl arylacetic acid lactones via 2-formimino-N,N-dimethyl arylacetamides is described and their properties discussed. Where carbinolimine-lactam tautomerism is possible, the equilibria can be studied by NMR and IR as well as by UV spectroscopy. 1,4-Dihydro derivatives and phthalonimides are obtained respectively by reduction and manganese dioxide oxidation of 3(2H)-isoquinolones