I'm using Farseer physics engine.
I have a simple rectangle body and would like it to split into two pieces given a starting coordinate (where the bullet enters the object) and ending coordinate (where it exits).
A common technique for creating cutaways or cross-sections is to use an arbitrary clipping plane to exclude a part of the body. By cloning the body and clipping an opposite part of the body you end up with two pieces of something that appears to have been sliced in two.
You would then have to use the stencil buffer to 'fill in' the clip edges, and create new physics bodies for the two new bodies.