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In this video tutorial, the presenter demonstrates how to create a modified block business letter using open punctuation, which omits the colon after the salutation and the comma after the complimentary close. This differs from mixed punctuation, which includes both. To format a business letter in modified block style, set a tab at 3.25 inches, the midpoint of a 6.5-inch typing line. The date and closing lines should align with this midpoint. You can set this up in a blank document before typing or adjust it after finishing. The video progresses to show a pre-typed, well-formatted letter with all necessary spacing.