Here is how to do it:
- Hold CTRL and SHIFT
- Use the mouse to drag a copy of the object (movement is locked horizontally or vertically)
- Release the mouse button
Thank you Titus Tielens (see his books on PowerPoint - in Dutch)
Here is how to do it:

Via adgoodness
The cut out is not perfect and it works best with images with a sharp color contrast. I mostly use it when working with a stock image from iStockPhoto that is an isolated object on a white background. Making the white background transparent gives me more design freedom in PowerPoint.
I got the image below from iStockPhoto (referral program link), many other stock photography sites have many, many of them.