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A clipping mask is using one layer to mask the contents of the
pixel containing layer above it. Photoshop calls the layer acting as a
clipping mask the base layer. The content in the base layer controls what is
visible in the layer above it. Transparent areas in the base layer will
hide pixels in the layer above. In other words, where you don't see anything
in the base layer, you will not see anything from the layer above it. Non-transparent areas
in the base layer will show pixels in
the layer above.
Clipping masks are often used to create text from an image. The steps
below show how this is done.

Figure 1. Clipping mask example

Figure 2. The Layers panel for Figure 1 above

Figure 3. In this example, the clipping mask and image were
merged and repositioned over another copy of the image
(3:02)
You can also use Add a layer style
in the Layers Panel to add
any desired effects to the Type layer. A popular layer style to use when
creating text from an image is an outside stroke.
If the position of the text and image combination is not where you want it, you can merge the clipped layers and reposition the resulting single layer. To merge the clipped layers, follow the steps below. The result of merging clipped layers can be seen in Figure 3.
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