The first word of a quoted sentence should begin with a capital letter. If only a phrase is quoted, do not capitalize the first word.
If a quoted sentence is interrupted by explanatory words, do not capitalize the first word after the interruption.
When quoting poetry, copy the poet’s capitalization exactly. Many poets capitalize the first word of every line of poetry.
A few contemporary poets dismiss capitalization (and spacing conventions) altogether.
Exercises:
Capitalization 1
Capitalization 2
Related topic:
Punctuating quotations