Why cuts into vinyl covers?

The hole or corner cut was to denote a not for sale promo copy.

or records that were returned by the stores to the distributor/manufacturers as dead inventory that didn't move- a/k/a "cut outs." (Labels don't take returns from stores like they used to, except possibly for defects- but stuff that didn't sell? They're stuck with it these days). 
Occasionally, on counterfeit copies of rare records, you'll see the punch hole reproduced in the artwork of the clone copy. The originals were overlooked in the marketplace when released but became collectible later. 

There's a pretty good story associated with MCA and a massive amount of returned inventory that was brokered for resale through Morris Levy.(It amounted to over 60 tractor trailer loads if memory serves). The skim, the scam, the sting and the threats over a wire were what finally led to Levy's conviction in a court of law. And that's really the least interesting part of Levy's life story. Worth reading about if this stuff interests you. 

As far as value, it depends. Nothing in vinyl is cut and dried. SQ wise promo copies tend to be early run and sound better. Except when they don't. Value wise they could be worth more- or less. Personally I buy for sound quality and all other things being equal will go for the sealed cut corner promo over a normal copy. But that's just me.

Thanks guys.  All my questions were answered and my curiosity satisfied.  And got an education to boot.  I knew the music industry was corrupt, but I was not aware of Morris Levy.  What a sleazebag of an individual.  He doesn't need to glorified, but you have to admit, that is a Netflix worthy biopic waiting to be written.