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These are: Tensile failure of the bolt body. Shear failure of the bolt threads. Shear failure of the internal threads. The lowest load that leads to failure determines the limiting torque.
To shear a machine screw ... Use one-hand bolt cutters to chop small bolts and machine screws, nails, staples, and wire. Large two-handed bolt cutters can produce 4,000 pounds of cutting force.