In the Cut literally means "in the vagina" or simply "the vagina". This line is spoken by Mark Ruffalo in the movie In the Cut where he is asked by Meg Ryan what his
sexual preference is, and he replies "I like it in the cut", which means he has no unusual kinks, he just likes women and regular sex; his preference is simply a woman's vagina with no frills. It is the same as a man saying, "I like pussy". "In the cut" might appear to be preferable to a man saying "I like pussy", but saying "I like it in the cut" is equally distasteful to women. It is tangential to a slang term for the vagina like "gaping axe wound".
Person A: Do you like spanking women?
Person B: Nah, I'm a simple guy, I like it in the cut.
Person A: "In the Cut",
what is that?
Person B: The cut is a woman's vagina, I just like
straight sex. I like pussy, it's that simple.