Give both meshes the colors and use the Boolean-tool (Tools->Polygon->Boolean subtract) and it will maintain material assignments:
Cheers
Frank
I must be doing something wrong then. is a color the same thing as a material that doesn't have a texture or is there a different way to apply a color?
I have a red material on the box and a white material on the ball. They are red and white until I put them inside a boolean subtract. At that point the ball becomes red even though the little material icon on the ball is still white.