diff -u -r1.94 fmt.c
--- src/fmt.c	9 Jul 2006 17:03:20 -0000	1.94
+++ src/fmt.c	5 Jan 2007 08:20:18 -0000
@@ -607,12 +607,15 @@
   const char *s;
 
   out_column = 0;
-  if (in_column > next_prefix_indent && c != '\n' && c != EOF)
+  if (in_column > next_prefix_indent || (c != '\n' && c != EOF))
     {
       put_space (next_prefix_indent);
       for (s = prefix; out_column != in_column && *s; out_column++)
 	putchar (*s++);
-      put_space (in_column - out_column);
+      if (c != EOF && c != '\n')
+	put_space (in_column - out_column);
+      if (c == EOF && in_column >= next_prefix_indent + prefix_length)
+	putchar ('\n');
     }
   while (c != '\n' && c != EOF)
     {
@@ -688,10 +691,8 @@
 	  flush_paragraph ();
 	}
       word_limit++;
-      if (c == EOF)
-	return EOF;
     }
-  while (c != '\n');
+  while (c != '\n' && c != EOF);
   return get_prefix (f);
 }
 
diff -u -r1.14 basic
--- tests/fmt/basic	17 Aug 2006 19:58:27 -0000	1.14
+++ tests/fmt/basic	5 Jan 2007 08:20:18 -0000
@@ -65,17 +65,9 @@
       {IN=>  " 1\n  2\n\t3\n\t\t4\n> quoted\n> text\n"},
       # This is the buggy output (leading white space removed),
       # from coreutils-5.93.
-      {OUT=> "1\n2\n3\n4\n> quoted text\n"}],
-      # FIXME: this is the desired output
-      # {OUT=> " 1\n  2\n\t3\n\t\t4\n> quoted text\n"}],
-
-     # Like the above, but when two adjacent, non-prefixed lines have
-     # the same indentation, ensure that they are formatted.
-     ['pfx-2', qw (-p '>'),
-      {IN=>  " 1\n 2\n\t3\n\t4\n"},
-      {OUT=> "1\n2\n3\n4\n"}],
-      # FIXME: this is the desired output
-      # {OUT=> " 1 2\n\t3 4\n"}],
+      # {OUT=> "1\n2\n3\n4\n> quoted text\n"}],
+      # this is the desired output
+      {OUT=> " 1\n  2\n\t3\n\t\t4\n> quoted text\n"}],
     );
 
 my $save_temps = $ENV{DEBUG};