Kansas City, Mo. ? H&R Block Inc. announced Monday that it is considering a possible sale of Option One, its once-vibrant mortgage subsidiary that has been struggling in recent months.

The Kansas City-based tax preparation company said other alternatives also are being considered for Option One, but a spokesman declined to elaborate on those possible scenarios.

Option One, based in Irvine, Calif., has struggled this year with rising interest rates and an increase in defaulting borrowers. H&R Block said the subsidiary will close 12 of its branch offices in the next four months, allowing it to consolidate one-third of its loan fulfillment operations.

H&R Block, which has seen its stock fall more than 18 percent over the past year, also revised its earnings guidance for fiscal 2007.

The company said it now expects its earnings per share for the fiscal year ending April 30 to be $1.20 to $1.45. It had earlier forecast $1.60 to $1.85 per share. The company said the change in guidance is attributable to changes in the mortgage segment and does not include any impact from a sale or other transaction affecting the business.

A potential sale or other alternative for Option One would help H&R Block focus on its core tax preparation business, Mark Ernst, chairman and chief executive officer, said in a news release.

The company has hired Goldman, Sachs & Co. to review alternatives for Option One. H&R Block’s board of directors would have to approve any proposed transaction.

H&R Block, the world’s largest tax services provider, has struggled through a year of lawsuits and poor financial results. At a shareholders’ meeting in September, Ernst said the company was working hard to turn itself around.

The company’s struggles come mostly from aggressive competition in its core tax preparation market and declining profits from Option One.

In September, it announced a first-quarter loss of $131.4 million, compared with a $28 million loss a year ago.

The number of retail clients taking their returns to H&R Block offices declined 2 percent from last year. And the company disclosed in February that it had to restate earnings for 2004 and 2005 because it had underestimated its state income tax liability by $32 million.