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While packages managed by package.el use tarballs for distributing the source code, this extension allows for packages to be fetched and upgraded directly from a version control system. To install a package from source use `package-vc-install'. If you aren't interested in activating a package, you can use `package-vc-checkout' instead, which will prompt you for a target directory. If you make local changes that you wish to share with an upstream maintainer, the command `package-vc-prepare-patch' can prepare these as patches to send via Email.
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