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You can delete books you have purchased from your Amazon account, but you can't delete the purchase record itself. So the book won't show in the ALL view on the device once the servers have synced with the device, but you can see the record of the purchase if you look in the correct place in Your Account.
You can't delete the KU record of books borrowed and returned, nor can you delete old magazines you've purchased. I've seen folks on the Amazon forums get ALL worked up over that.
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