Set Transform Area
The Set Transformation Area tool will allow you to crop an input image based on:
Bounding Rectangle
If the output area is to be rectangular you may select Image Extents (the default setting) to output the entire bounds of the image. Selecting Reference Point Extents will crop the image to the minimum bounding rectangle of the reference coordinates of the image. If you are starting with a scanned map this can be useful for quickly removing collars from the scanned image. if you are referencing the corners of the data frame. To manually specify the output area, select User Defined and use the following options:
Manually
Draw Rectangle
On the
viewer toolbar, select the tool.
On the viewer click and drag the cursor to draw a rectangular polygon
in the area you would like to crop to. The rectangle area will display
with a transparent overlay. The rectangle can then be adjusted by
selecting the 
arrow tool, and
dragging the vertices of the rectangle to the desired location.
Manually
Draw Polygon
On the
viewer toolbar, select the tool. On the viewer
click your cursor at points around the area you wish to enclose with the
polygon. When you have defined the area of the polygon, double-click
the cursor to close the polygon. The polygon can then be adjusted
by selecting the arrow tool,
this will enable vertex editing of the polygon. Individual vertices
can be dragged to new locations. Once a polygon has been drawn,
vertices cannot be added or removed. To add more vertices, a new
polygon will have to be drawn. See also Non-rectangular Crops
Manually Draw Ellipse / Circle
On the viewer toolbar, select the tool. Click and drag on the viewer to create an ellipse or circular shape. Selecting the arrow tool to enable stretching of the axis, or moving of the ellipse.
Rectangle specified by Coordinates
To manually enter the coordinates for the output area, in the Crop Area Bounds panel in the lower right area of the Set Transformation Area dialog in the text boxes, enter the coordinates to describe the minimum bounding rectangle for the area you wish to crop to. As you click from text box to text box, the highlighted crop area will change to reflect the updated coordinate value.