I am using the Entity Framework code first for data access and I have a Company class which has a collection of Employees. The Employee class also has a Company property.
I think they have fixed this in the latest version.
Check out the help docs under the section "Serializing and Deserializing JSON -> Serialization and Preserving Object References".
Set this setting when initializing the JSON.Net Serializer:
PreserveReferencesHandling = PreserveReferencesHandling.Objects;
So an example would be this:
var serializerSettings = new JsonSerializerSettings { PreserveReferencesHandling = PreserveReferencesHandling.Objects };
string json = JsonConvert.SerializeObject(people, Formatting.Indented, serializerSettings);
I verified that this works with my code first solution, and a circular reference in the navigation properties. If you look at the resulting JSON it should have "$id" and "$ref" properties everywhere.