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I don't think so. "it's" is typically "it is". My old english teacher would've had a fit if I wrote that. :)
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Those guys are correct. You could rewrite the sentence to use a possessive apostrophe though: The dog's tail wagged.
... it's ... is the short form for ... it is.
... its tail ... or ... its' tail ... is/are correct for the possessive one.
no, that's wrong:
its as a possesive doesn't carry the apostrophy;
it's as a shortening of it is, does.
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