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I can think of a few options: Indent the story-within-a-story and treat dialogue normally (just double quotes). Put your Aesop section in italics, the story-within-a-story in book, and treat all dialogue normally. Use some kind of scene break formatting (extra returns, a dingbat, a string of * * * * ) to indicate "this is the story within the story" and ...


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If the thought interrupts the description the way a piece of dialogue does, you can italicize. (Some writers use quotation marks instead, while still others capitalize the thought like a quotation, but without the quote marks.) The point of italics is to separate the character's thought from the rest of the text and avoid any confusion between what's going ...



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