The Knife tool only works on vectors. One way to do what you want is to draw a rectangle over it with the Beveled Rectangle tool, and then adjust the corners in the Autoshape Preperties panel. Once you've got the corners right, make sure the fill color of the beveled rectangle is white, and then shift-select both the rectangle and the image and choose Modify > Mask > Group as Mask.
I have a follow up question. My end objective is to create a border around the image that follows the slants. I creating the border with a photoshop live effect stroke. Using Linda's suggestion and the stroke, I get the borders chopped off except for the slanted corners. I tried over sizing the Beveled Rectangle but that didn't work.
How would I create a image with slanted corners and border around it?
Thank you for the great answer!!!!
SElec t the mask group in the Layers panel and choose Modify > Group, and then Modify > Flatten Selection. Apply your border.