H&R Block (NYSE:HRB) is up nearly 4% today, simply for selling its subprime mortgage business, Option One Mortgage. Of course, this is a business that is bleeding money, so the market's reaction is not a surprise.

The deal with Cerebus Capital Management is a creative one, and H&R expects the deal will close by the end of October. When that happens, H&R will receive the value of the net tangible assets less $300 million. As of today that would be about $1 billion, and H&R could get more if Option One has positive net income in the 18 months following the closing. The value of the assets is likely to change before the closing, because the company has retained the right to sell certain assets. All things considered, it's a good deal.

Now H&R Block can concentrate on competing with Intuit (NASDAQ:INTU) and Jackson Hewitt Tax Service (NYSE:JTX) in the tax services space. It's a seasonal business and it's competitive, but it's not so bad, because it is a business where H&R Block has a stronger position than it had in mortgages.

At the time of publication, Nathan Parmelee had no financial position in any of the companies mentioned. Nathan is ranked 154th out of 27,450 investors in Motley Fool CAPS. Intuit is an Inside Value pick. The Motley Fool has an ironclad disclosure policy.