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A Stock Phrase in fictional works of all kinds. Popular, partly because you can get away with more outrageous elements if you say "The Tasteless But True Story", and partly because some works happen to be based on true stories.
As an illustrative example, we will use the story of Donald Sheer finding an original copy of the Declaration of Independence behind a painting bought at a flea market and auctioning it for US$2.42 million.
- Documentary (and Nonfiction in general): "A true story", no "based on"—something like the Snopes.com page above, only told with interviews, Stock Footage, and narration. Elements can still possibly be exaggerated via Manipulative Editing or use re-enactments to visualize him finding the painting.
- Roman à Clef: A true story, just with the names changed, to protect the innocent. Perhaps you will call the hero "Daniel Light" and write dialogue for the bits which weren't televised, but he'll still just find the Declaration and sell it.
- Dramatization: Changes are made, but largely for the sake of telling the proper story instead of adding drama / conflict to the proceedings. Such changes might make the painting be bought at a yard sale or three seperate appraisers are merged into one specialist to avoid redundancy. The actual term Dramatization can refer to any of the other types, depending on how it is used.
- Very Loosely Based on a True Story: The idea came from the story, and you can tell it did if you look at the original story, but characters and events are invented, conflated, distorted, etc. From this a plot might be added where the previous owner suing Daniel for a share of the auction money or Daniel has to barricade his house from potential thieves.
- Based on a Great Big Lie: Purporting to be Roman à Clef or Very Loosely Based, only the "true story" never existed (for example, if Stan Caffy's garage had burned down before he donated the painting to the thrift store, but you told one of the above anyway).
- Ripped from the Headlines: A (usually loose) adaptation of a story very recently in the public eye for fiction.
- Inspired By and Suggested By: Alternatives to the phrase "Based on a True Story" (or "Based On The Novel", or "Based On The Legend", or...) that imply the Very Loosely.
- The Tasteless But True Story: The use of "Based on a True Story" as an excuse to dwell on prurient, morbid, or otherwise nasty aspects of the tale.
- Direct Line to the Author: Where the creator pretends that a work of fiction is a "true story" or a Dramatisation
- Literary Agent Hypothesis: When fans theorise that a work is based on actual events, which are published as fiction.