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To make a cut line on a JPEG, first make a copy and select it. Go to Windows -> Image Trace and pick a simple preset. Play around with settings to get three colors. Then go to Object -> Image Trace -> Expand -> Ungroup to remove the background. Then go to Windows -> Pathfinder, click Unite, and go to Versaworks to select the cut line. Reverse it, release properties, and click off to select only the cut line for your final cut design.