Proper way of quoting thoughts

I posted this question on the author's site and got some excellent responses, but the grammar ruling on this still remains a mystery so I thought I'd also post the question here. How do you signify someone's thoughts when writing dialogue (i.e., transitioning from spoken dialogue to a thought)? Do you use double quotes, single quotes, or leave them off altogether? For example...

"That's a lovely dress," she said. "If you're hanging next to a window," she thought.

or

"That's a lovely dress," she said, if you're hanging next to a window, she thought.

or

"That's a lovely dress," she said. 'If you're hanging next to a window,' she thought.

The second example looks correct to me, but I can't find the exact rules in my grammar book. If this is the correct convention, would it all be one sentence, as in my example, or would it be broken up into seperate sentences (or paragraphs), as in...

"That's a lovely dress," she said. If you're hanging next to a window, she thought.

Thanks!

First off, I don't think it's as much a grammar rule as much as a punctuation rule. I do have a small issue with your preference, however: it includes a comma splice. The dead stop in your first and example is actually better. Your last example includes single quotes for thoughts, which have their adherents, but it is not a widely accepted house style (more on this below).

Second, there are a number of conventions used today, all of them have their fans. There are major differences between those used by writers in the U.S. and the U.K., especially when applying double quotes (") and single quotes (').

Third, whatever the convention you choose, just be consistent throughout your story piece. For writers in the U.S., here are some generally accepted examples from the The Chicago Manual of Style, 14th Edition, (parentheses are mine):

1) "I don't care if we offended Morgenstern," thought Vera. "Besides," she told herself, "they're all fools!"
(An example using double quotation marks. But attributives are needed to distinguish what is spoken and was is thought.)

2) "I should have said, 'What business is it of yours!'" thought Tom.
(An interesting example using single quotation marks of someone quoting themselves. Single quotes in the U.S. are generally reserved for quotations within quotations; that convention is reversed in the U.K. The Chicago Manual of Style does not suggest using single quotes for interior dialog.)

3) I suppose he's telling her right now, "Morgenstern is not to be trusted."
(Similar to 1. This person is thinking/supposing what was said.)

But contrast it to the following indirect or paraphrased discourse without punctuation:
3A) I suppose he's telling her right now that Morgenstern is not to be trusted.


4) Francine blushed and turned away. I could die! she told herself.
(Another convention is not to use any quotes at all.)

5) Edgar looked at her in despair and thought, Now what have I done?
(Italics are used a lot in contemporary writing and fiction, and I'm a fan of their use.)



Finally, back to your inquiry.

My suggestion (a personal preference, really) would be to use italics since it provides a nice contrast between direct speech and thought, and it eliminates the need for the attributive: she thought (or, he thought).

"That's a lovely dress," she said. If you're hanging next to a window.



But equally as good are:

"That's a lovely dress," she said. "If you're hanging next to a window," she thought.

or

"That's a lovely dress," she said. If you're hanging next to a window, she thought.



Good luck in your writing.

ProofreadManx,

Thanks for your detailed response - it was very helpful.