diff --git a/shell/ash.c b/shell/ash.c
index 6f8bc9042..40ca82d0b 100644
--- a/shell/ash.c
+++ b/shell/ash.c
@@ -11999,8 +11999,11 @@ readtoken1(int c, int syntax, char *eofmark, int striptabs)
 		CHECKSTRSPACE(4, out);  /* permit 4 calls to USTPUTC */
 		switch (SIT(c, synstack->syntax)) {
 		case CNL:       /* '\n' */
-			if (synstack->syntax == BASESYNTAX)
+			if (synstack->syntax == BASESYNTAX
+			 && !synstack->varnest
+			) {
 				goto endword;   /* exit outer loop */
+			}
 			USTPUTC(c, out);
 			nlprompt();
 			c = pgetc();
diff --git a/shell/ash_test/ash-vars/param_expand_alt2.right b/shell/ash_test/ash-vars/param_expand_alt2.right
new file mode 100644
index 000000000..fef5889ca
--- /dev/null
+++ b/shell/ash_test/ash-vars/param_expand_alt2.right
@@ -0,0 +1,4 @@
+Unquoted: H H
+Quoted: H
+H
+Ok:0
diff --git a/shell/ash_test/ash-vars/param_expand_alt2.tests b/shell/ash_test/ash-vars/param_expand_alt2.tests
new file mode 100755
index 000000000..d8abf4c3b
--- /dev/null
+++ b/shell/ash_test/ash-vars/param_expand_alt2.tests
@@ -0,0 +1,7 @@
+echo Unquoted: H${$+
+}H
+
+echo Quoted: "H${$+
+}H"
+
+echo Ok:$?
diff --git a/shell/hush_test/hush-vars/param_expand_alt2.right b/shell/hush_test/hush-vars/param_expand_alt2.right
new file mode 100644
index 000000000..fef5889ca
--- /dev/null
+++ b/shell/hush_test/hush-vars/param_expand_alt2.right
@@ -0,0 +1,4 @@
+Unquoted: H H
+Quoted: H
+H
+Ok:0
diff --git a/shell/hush_test/hush-vars/param_expand_alt2.tests b/shell/hush_test/hush-vars/param_expand_alt2.tests
new file mode 100755
index 000000000..d8abf4c3b
--- /dev/null
+++ b/shell/hush_test/hush-vars/param_expand_alt2.tests
@@ -0,0 +1,7 @@
+echo Unquoted: H${$+
+}H
+
+echo Quoted: "H${$+
+}H"
+
+echo Ok:$?