removing part of an image

Hi All,

I have another question for you wonderful people Smile

Im struggling a little with something I have been able to do on numerous occasions without problem. If you take a look at the image below, what I want to do is remove the parts of the red logo below the black line. normally I would use the virtual segment delete tool. this is working with the red outer line, but not on the letters. rather than removing the part of the letter below the line, it is removing the whole letter. Also it is leaving a square edge on the line, and not removing it on an angle. I understadn why this is, but would like to know how to do this properly.