“The method of which I speak is that which chooses from life what is curious, telling and dramatic; it does not seek to copy life, but keeps to it closely enough not to shock the reader into disbelief; it leaves out this and changes that; it makes a formal decoration out of such facts as it has found convenient to deal with and presents a picture, the result of artifice, which, because it represents the author’s temperament, is to a certain extent a portion of himself, but which is designed to excite, interest and absorb the reader. If it is a success he accepts it as true.” – W. Somerset Maugham
If there’s a better single sentence on turning real events into fiction, I’ve never seen it.