diff --git a/protected/java/src/org/broadinstitute/sting/gatk/walkers/haplotypecaller/readthreading/ReadThreadingGraph.java b/protected/java/src/org/broadinstitute/sting/gatk/walkers/haplotypecaller/readthreading/ReadThreadingGraph.java
index 47d14e185..2a94ece96 100644
--- a/protected/java/src/org/broadinstitute/sting/gatk/walkers/haplotypecaller/readthreading/ReadThreadingGraph.java
+++ b/protected/java/src/org/broadinstitute/sting/gatk/walkers/haplotypecaller/readthreading/ReadThreadingGraph.java
@@ -340,8 +340,15 @@ public class ReadThreadingGraph extends BaseGraph<MultiDeBruijnVertex, MultiSamp
             return 0;
 
         final int altIndexToMerge = Math.max(danglingTailMergeResult.cigar.getReadLength() - matchingSuffix - 1, 0);
+
+        // there is an important edge condition that we need to handle here: Smith-Waterman correctly calculates that there is a
+        // deletion, that deletion is left-aligned such that the LCA node is part of that deletion, and the rest of the dangling
+        // tail is a perfect match to the suffix of the reference path.  In this case we need to push the reference index to merge
+        // down one position so that we don't incorrectly cut a base off of the deletion.
         final boolean firstElementIsDeletion = elements.get(0).getOperator() == CigarOperator.D;
-        final int refIndexToMerge = lastRefIndex - matchingSuffix + 1 + (firstElementIsDeletion ? 1 : 0); // need to push down if SW tells us to remove the LCA
+        final boolean mustHandleLeadingDeletionCase =  firstElementIsDeletion && (elements.get(0).getLength() + matchingSuffix == lastRefIndex + 1);
+        final int refIndexToMerge = lastRefIndex - matchingSuffix + 1 + (mustHandleLeadingDeletionCase ? 1 : 0);
+
         addEdge(danglingTailMergeResult.danglingPath.get(altIndexToMerge), danglingTailMergeResult.referencePath.get(refIndexToMerge), ((MyEdgeFactory)getEdgeFactory()).createEdge(false, 1));
         return 1;
     }
diff --git a/protected/java/test/org/broadinstitute/sting/gatk/walkers/haplotypecaller/HaplotypeCallerIntegrationTest.java b/protected/java/test/org/broadinstitute/sting/gatk/walkers/haplotypecaller/HaplotypeCallerIntegrationTest.java
index 007a5838c..645ec3c4b 100644
--- a/protected/java/test/org/broadinstitute/sting/gatk/walkers/haplotypecaller/HaplotypeCallerIntegrationTest.java
+++ b/protected/java/test/org/broadinstitute/sting/gatk/walkers/haplotypecaller/HaplotypeCallerIntegrationTest.java
@@ -47,22 +47,27 @@
 package org.broadinstitute.sting.gatk.walkers.haplotypecaller;
 
 import net.sf.picard.reference.IndexedFastaSequenceFile;
+import org.broad.tribble.readers.AsciiLineReader;
+import org.broad.tribble.readers.PositionalBufferedStream;
 import org.broadinstitute.sting.WalkerTest;
 import org.broadinstitute.sting.utils.GenomeLoc;
 import org.broadinstitute.sting.utils.GenomeLocParser;
 import org.broadinstitute.sting.utils.collections.Pair;
 import org.broadinstitute.sting.utils.variant.GATKVCFUtils;
 import org.broadinstitute.variant.variantcontext.VariantContext;
+import org.broadinstitute.variant.vcf.VCFCodec;
+import org.testng.Assert;
 import org.testng.annotations.Test;
 
 import java.io.File;
+import java.io.FileInputStream;
 import java.io.FileNotFoundException;
 import java.io.IOException;
 import java.util.*;
 
 public class HaplotypeCallerIntegrationTest extends WalkerTest {
     final static String REF = b37KGReference;
-    final static String NA12878_BAM = validationDataLocation + "NA12878.HiSeq.b37.chr20.10_11mb.bam";
+    final static String NA12878_BAM = privateTestDir + "NA12878.HiSeq.b37.chr20.10_11mb.bam";
     final static String NA12878_CHR20_BAM = validationDataLocation + "NA12878.HiSeq.WGS.bwa.cleaned.recal.hg19.20.bam";
     final static String CEUTRIO_BAM = validationDataLocation + "CEUTrio.HiSeq.b37.chr20.10_11mb.bam";
     final static String NA12878_RECALIBRATED_BAM = privateTestDir + "NA12878.100kb.BQSRv2.example.bam";
@@ -176,6 +181,26 @@ public class HaplotypeCallerIntegrationTest extends WalkerTest {
         executeTest("HCTestDoesNotFailOnBadRefBase: ", spec);
     }
 
+    @Test
+    public void HCTestDanglingTailMergingForDeletions() throws IOException {
+        final String base = String.format("-T HaplotypeCaller --disableDithering -R %s -I %s", REF, NA12878_BAM) + " --no_cmdline_in_header -o %s -L 20:10130740-10130800";
+        final WalkerTestSpec spec = new WalkerTestSpec(base, 1, Arrays.asList(""));
+        final File outputVCF = executeTest("HCTestDanglingTailMergingForDeletions", spec).getFirst().get(0);
+
+        // confirm that the call is the correct one
+        final VCFCodec codec = new VCFCodec();
+        final FileInputStream s = new FileInputStream(outputVCF);
+        final AsciiLineReader lineReader = new AsciiLineReader(new PositionalBufferedStream(s));
+        codec.readHeader(lineReader);
+        final String line = lineReader.readLine();
+        Assert.assertFalse(line == null);
+        final VariantContext vc = codec.decode(line);
+        Assert.assertTrue(vc.isBiallelic());
+        Assert.assertTrue(vc.getReference().basesMatch("ATGTATG"));
+        Assert.assertTrue(vc.getAlternateAllele(0).basesMatch("A"));
+    }
+
+
     // --------------------------------------------------------------------------------------------------------------
     //
     // testing reduced reads