diff --git a/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/__snapshots__/verify-md-files.expected/labels/CustomLabels.labels b/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/__snapshots__/verify-md-files.expected/labels/CustomLabels.labels
new file mode 100644
index 0000000000..d57a2391aa
--- /dev/null
+++ b/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/__snapshots__/verify-md-files.expected/labels/CustomLabels.labels
@@ -0,0 +1,24 @@
+<?xml version="1.0" encoding="UTF-8"?>
+<CustomLabels xmlns="http://soap.sforce.com/2006/04/metadata">
+    <labels>
+        <fullName>DeleteMe</fullName>
+        <language>en_US</language>
+        <protected>true</protected>
+        <shortDescription>DeleteMe</shortDescription>
+        <value>Test</value>
+    </labels>
+    <labels>
+        <fullName>KeepMe1</fullName>
+        <language>en_US</language>
+        <protected>true</protected>
+        <shortDescription>KeepMe1</shortDescription>
+        <value>Test</value>
+    </labels>
+    <labels>
+        <fullName>KeepMe2</fullName>
+        <language>en_US</language>
+        <protected>true</protected>
+        <shortDescription>KeepMe2</shortDescription>
+        <value>Test</value>
+    </labels>
+</CustomLabels>
diff --git a/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/__snapshots__/verify-md-files.expected/package.xml b/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/__snapshots__/verify-md-files.expected/package.xml
new file mode 100644
index 0000000000..51950dd57c
--- /dev/null
+++ b/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/__snapshots__/verify-md-files.expected/package.xml
@@ -0,0 +1,8 @@
+<?xml version="1.0" encoding="UTF-8"?>
+<Package xmlns="http://soap.sforce.com/2006/04/metadata">
+    <types>
+        <members>CustomLabels</members>
+        <name>CustomLabels</name>
+    </types>
+    <version>60.0</version>
+</Package>
diff --git a/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/__snapshots__/verify-source-files.expected/force-app/main/default/labels/CustomLabels/CustomLabels.labels-meta.xml b/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/__snapshots__/verify-source-files.expected/force-app/main/default/labels/CustomLabels/CustomLabels.labels-meta.xml
new file mode 100644
index 0000000000..6d9520ca90
--- /dev/null
+++ b/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/__snapshots__/verify-source-files.expected/force-app/main/default/labels/CustomLabels/CustomLabels.labels-meta.xml
@@ -0,0 +1,2 @@
+<?xml version="1.0" encoding="UTF-8"?>
+<CustomLabels xmlns="http://soap.sforce.com/2006/04/metadata"></CustomLabels>
diff --git a/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/__snapshots__/verify-source-files.expected/force-app/main/default/labels/CustomLabels/DeleteMe.label-meta.xml b/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/__snapshots__/verify-source-files.expected/force-app/main/default/labels/CustomLabels/DeleteMe.label-meta.xml
new file mode 100644
index 0000000000..14bf9da669
--- /dev/null
+++ b/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/__snapshots__/verify-source-files.expected/force-app/main/default/labels/CustomLabels/DeleteMe.label-meta.xml
@@ -0,0 +1,8 @@
+<?xml version="1.0" encoding="UTF-8"?>
+<CustomLabel xmlns="http://soap.sforce.com/2006/04/metadata">
+    <fullName>DeleteMe</fullName>
+    <language>en_US</language>
+    <protected>true</protected>
+    <shortDescription>DeleteMe</shortDescription>
+    <value>Test</value>
+</CustomLabel>
diff --git a/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/__snapshots__/verify-source-files.expected/force-app/main/default/labels/CustomLabels/KeepMe1.label-meta.xml b/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/__snapshots__/verify-source-files.expected/force-app/main/default/labels/CustomLabels/KeepMe1.label-meta.xml
new file mode 100644
index 0000000000..9a78141d6e
--- /dev/null
+++ b/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/__snapshots__/verify-source-files.expected/force-app/main/default/labels/CustomLabels/KeepMe1.label-meta.xml
@@ -0,0 +1,8 @@
+<?xml version="1.0" encoding="UTF-8"?>
+<CustomLabel xmlns="http://soap.sforce.com/2006/04/metadata">
+    <fullName>KeepMe1</fullName>
+    <language>en_US</language>
+    <protected>true</protected>
+    <shortDescription>KeepMe1</shortDescription>
+    <value>Test</value>
+</CustomLabel>
diff --git a/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/__snapshots__/verify-source-files.expected/force-app/main/default/labels/CustomLabels/KeepMe2.label-meta.xml b/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/__snapshots__/verify-source-files.expected/force-app/main/default/labels/CustomLabels/KeepMe2.label-meta.xml
new file mode 100644
index 0000000000..64ab9ef9b3
--- /dev/null
+++ b/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/__snapshots__/verify-source-files.expected/force-app/main/default/labels/CustomLabels/KeepMe2.label-meta.xml
@@ -0,0 +1,8 @@
+<?xml version="1.0" encoding="UTF-8"?>
+<CustomLabel xmlns="http://soap.sforce.com/2006/04/metadata">
+    <fullName>KeepMe2</fullName>
+    <language>en_US</language>
+    <protected>true</protected>
+    <shortDescription>KeepMe2</shortDescription>
+    <value>Test</value>
+</CustomLabel>
diff --git a/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/originalMdapi/labels/CustomLabels.labels b/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/originalMdapi/labels/CustomLabels.labels
new file mode 100644
index 0000000000..d57a2391aa
--- /dev/null
+++ b/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/originalMdapi/labels/CustomLabels.labels
@@ -0,0 +1,24 @@
+<?xml version="1.0" encoding="UTF-8"?>
+<CustomLabels xmlns="http://soap.sforce.com/2006/04/metadata">
+    <labels>
+        <fullName>DeleteMe</fullName>
+        <language>en_US</language>
+        <protected>true</protected>
+        <shortDescription>DeleteMe</shortDescription>
+        <value>Test</value>
+    </labels>
+    <labels>
+        <fullName>KeepMe1</fullName>
+        <language>en_US</language>
+        <protected>true</protected>
+        <shortDescription>KeepMe1</shortDescription>
+        <value>Test</value>
+    </labels>
+    <labels>
+        <fullName>KeepMe2</fullName>
+        <language>en_US</language>
+        <protected>true</protected>
+        <shortDescription>KeepMe2</shortDescription>
+        <value>Test</value>
+    </labels>
+</CustomLabels>
diff --git a/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/originalMdapi/package.xml b/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/originalMdapi/package.xml
new file mode 100644
index 0000000000..76c38d0d62
--- /dev/null
+++ b/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/originalMdapi/package.xml
@@ -0,0 +1,14 @@
+<?xml version="1.0" encoding="UTF-8"?>
+<Package xmlns="http://soap.sforce.com/2006/04/metadata">
+    <types>
+        <members>DeleteMe</members>
+        <members>KeepMe1</members>
+        <members>KeepMe2</members>
+        <name>CustomLabel</name>
+    </types>
+    <types>
+        <members>CustomLabels</members>
+        <name>CustomLabels</name>
+    </types>
+    <version>57.0</version>
+</Package>
diff --git a/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/sfdx-project.json b/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/sfdx-project.json
new file mode 100644
index 0000000000..97d16c7028
--- /dev/null
+++ b/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/sfdx-project.json
@@ -0,0 +1,13 @@
+{
+  "name": "variantTest",
+  "namespace": "",
+  "packageDirectories": [
+    {
+      "default": true,
+      "path": "force-app"
+    }
+  ],
+  "sourceBehaviorOptions": ["decomposeCustomLabelsBeta"],
+  "sfdcLoginUrl": "https://login.salesforce.com",
+  "sourceApiVersion": "60.0"
+}
diff --git a/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/snapshots.test.ts b/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/snapshots.test.ts
new file mode 100644
index 0000000000..fbb625b584
--- /dev/null
+++ b/test/snapshot/sampleProjects/preset-decomposeLabels_Deprecated/snapshots.test.ts
@@ -0,0 +1,59 @@
+/*
+ * Copyright (c) 2023, salesforce.com, inc.
+ * All rights reserved.
+ * Licensed under the BSD 3-Clause license.
+ * For full license text, see LICENSE.txt file in the repo root or https://opensource.org/licenses/BSD-3-Clause
+ */
+import * as fs from 'node:fs';
+import * as path from 'node:path';
+import {
+  compareTwoXml,
+  fileSnap,
+  mdapiToSource,
+  sourceToMdapi,
+  MDAPI_OUT,
+  dirsAreIdentical,
+  FORCE_APP,
+} from '../../helper/conversions';
+
+// we don't want failing tests outputting over each other
+/* eslint-disable no-await-in-loop */
+
+describe('decomposed custom labels', () => {
+  const testDir = path.join('test', 'snapshot', 'sampleProjects', 'preset-decomposeLabels_Deprecated');
+  let sourceFiles: string[];
+  let mdFiles: string[];
+
+  before(async () => {
+    sourceFiles = await mdapiToSource(testDir);
+    mdFiles = await sourceToMdapi(testDir);
+  });
+  it('verify source files', async () => {
+    for (const file of sourceFiles) {
+      await fileSnap(file, testDir);
+    }
+    dirsAreIdentical(
+      path.join(testDir, FORCE_APP),
+      path.join(testDir, '__snapshots__', 'verify-source-files.expected', FORCE_APP)
+    );
+  });
+  it('verify md files', async () => {
+    for (const file of mdFiles) {
+      await fileSnap(file, testDir);
+    }
+  });
+  it('round trip of metadata format is equivalent', async () => {
+    const [old, updated] = await Promise.all([
+      fs.promises.readFile(path.join(testDir, 'originalMdapi', 'labels', 'CustomLabels.labels'), 'utf8'),
+      fs.promises.readFile(path.join(testDir, MDAPI_OUT, 'labels', 'CustomLabels.labels'), 'utf8'),
+    ]);
+    compareTwoXml(old, updated);
+  });
+
+  after(async () => {
+    await Promise.all([
+      fs.promises.rm(path.join(testDir, FORCE_APP), { recursive: true, force: true }),
+      fs.promises.rm(path.join(testDir, MDAPI_OUT), { recursive: true, force: true }),
+    ]);
+  });
+});