A diminished seventh chord built on the fourth scale degree of the key. Think about it for a second.
Now, do you think this chord can resolve to the tonic in a iv o7 – I progression?
Let’s see in comparison to a regular ii 7 – V 7 – I progression:

If you play these chords, you will hear that both of them sound like complete resolutions to the I chord. But why?
Well, first start off by looking at the enharmonics of the iv o7 chord. Notice how there are 3 shared common tones. What’s more, the one note that is different is the b9 of the V chord. So basically, the iv o7 acts as a V 7(b9) chord with the seventh in the bass.
Try it out and see what else you can use it with.
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