Background Cut out
Start with a colour image and and leave the
background as white. The background colour will be what shows
through behind the cutout when complete. Create a two new layers by
clicking the new layer button twice:

With the top most layer selected (Layer 2 as in pic
above), select the Epical marquee tool and draw a nice oval on the
image. The select Edit -> Stroke. Select a stroke size on one and
select Centre. Don't forget to reset your colours to black and white
by clicking the little black/white selector under the main colour
selector. This step is optional, but I find it helps to have a
outline to do the cutout around. Then do Ctrl+D to remove the
selection. This layer gets deleted later.


Now click and hold the mouse on the lasso tool, a
side menu pops up, select the polygon lasso as below:

Select Layer 1 (just click on it), and now draw a
nice jagged outline around the ellipse you have already on the
image:

Now click on the Select menu and select Inverse (or
Ctrl+Shift+I). Click on the foreground colour picker and choose a
colour, for this example I'm using a light blue. Click on the Bucket
Full, set the fill options to a tolerance of 255. Fill the area
outside of the cutout.



Now lets get rid of the ellipse that was drawn
earlier. Click on layer two and drag it to the rubbish bin icon
below. Then we want to create a duplicate of the cutout layer for
the shadow, so drag the remaining layer to the new layer icon:


Select the layer above the background by clicking on
it (Layer 1), then use Ctrl+L to adjust the levels:



Now hold down the Control key and while keeping this
key down click and hold the right mouse button to move the black
cutout layer. Just move it a little to the right and perhaps down a
bit. Just enough to create the look we want. Then select Filter
-> Blur and choose Gaussian blur. Select a value about 2.

To put stuff under the cut out just place it on the
background layer. If needed, use the Ctrl+Mouse click to move the
black layer again to adjust how it looks:

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