diff --git a/src/services/formatting.ts b/src/services/formatting.ts
index f58f1ccb33e..fc64329c3e0 100644
--- a/src/services/formatting.ts
+++ b/src/services/formatting.ts
@@ -701,25 +701,23 @@ module ts.formatting {
                 applyRuleEdits(rule, previousItem, previousStartLine, currentItem, currentStartLine);
 
                 if (rule.Operation.Action & (RuleAction.Space | RuleAction.Delete) && currentStartLine !== previousStartLine) {
+                    lineAdded = false;
                     // Handle the case where the next line is moved to be the end of this line. 
                     // In this case we don't indent the next line in the next pass.
                     if (currentParent.getStart(sourceFile) === currentItem.pos) {
-                        lineAdded = false;
+                        dynamicIndentation.recomputeIndentation(/*lineAdded*/ false);
                     }
                 }
                 else if (rule.Operation.Action & RuleAction.NewLine && currentStartLine === previousStartLine) {
+                    lineAdded = true;
                     // Handle the case where token2 is moved to the new line. 
                     // In this case we indent token2 in the next pass but we set
                     // sameLineIndent flag to notify the indenter that the indentation is within the line.
                     if (currentParent.getStart(sourceFile) === currentItem.pos) {
-                        lineAdded = true;
+                        dynamicIndentation.recomputeIndentation(/*lineAdded*/ true);
                     }
                 }
 
-                if (lineAdded !== undefined) {
-                    dynamicIndentation.recomputeIndentation(lineAdded);
-                }
-
                 // We need to trim trailing whitespace between the tokens if they were on different lines, and no rule was applied to put them on the same line
                 trimTrailingWhitespaces =
                 (rule.Operation.Action & (RuleAction.NewLine | RuleAction.Space)) &&
diff --git a/tests/cases/fourslash/formatNestedClassWithOpenBraceOnNewLines.ts b/tests/cases/fourslash/formatNestedClassWithOpenBraceOnNewLines.ts
new file mode 100644
index 00000000000..2f3157a2833
--- /dev/null
+++ b/tests/cases/fourslash/formatNestedClassWithOpenBraceOnNewLines.ts
@@ -0,0 +1,21 @@
+/// <reference path="fourslash.ts" />
+
+////module A
+////{
+////    class B {
+////        /*1*/
+////}
+
+format.setOption("PlaceOpenBraceOnNewLineForControlBlocks", true);
+format.setOption("PlaceOpenBraceOnNewLineForFunctions", true);
+goTo.marker("1");
+edit.insert("}");
+
+verify.currentFileContentIs(
+"module A\n\
+{\n\
+    class B\n\
+    {\n\
+    }\n\
+}"
+);
\ No newline at end of file