UPDATE 1-H&R Block drops plan to buy TaxACT maker

* To not incur any early termination penalty

* Deal end effective Nov. 14

Nov 15 (Reuters) - H&R Block Inc, the largest U.S. tax preparer, said it dropped its plan to acquire TaxACT software maker 2SS Holdings, after the deal hit an antitrust hurdle.

On Oct. 31, Judge Beryl Howell of the U.S. District Court for the District of Columbia had issued a permanent injunction blocking the deal from going forward.

H&R Block had agreed to acquire the company in October 2010 for $287.5 million in cash, but the Department of Justice filed a lawsuit to stop the deal arguing that it would be anti-competitive.

TaxACT was the first software to offer basic tax preparation assistance online for free.

H&R Block is not expected to incur any early termination penalties as a result of the termination of the deal, effective Nov. 14.