Very nice toadstool (and photo)!
See
www.garf.org On the left menu, look under Propogation, then Sarcophyton. There's some photos and a movie clip.
You can cut off the entire crown, if it's not overly large (not sure what the size "limit" is); or cut off sections and make multiple frags out of it. I've looked into doing this to our own toadstool (see avatar), but have yet to actually do it. I was told mine was a little large to cut off the entire crown (it's almost 6" across now), so I'll be cutting off a section or two of the ruffled / folded areas once I get brave enough. I was told it was very easy and that I shouldn't worry much about it. If you frag it in-tank, it's recommended to run carbon to catch the chemicals that'll be released when you cut it.