(A) As used in this section:

1. (1) "Adjusted value" means:

   1. (a) In the case of the gross estate, the value of the gross estate as determined pursuant to section 5731.01 of the Revised Code and without regard to this section, reduced by any amounts allowable as a deduction under division (A)(4) of section 5731.16 of the Revised Code;
   2. (b) In the case of any real or personal property, the value of the property as determined pursuant to section 5731.01 of the Revised Code and without regard to this section, reduced by any amounts allowable as a deduction in respect to such property under division (A)(4) of section 5731.16 of the Revised Code.
2. (2) "Member of the decedent's family" means, with respect to any decedent, only his ancestor or lineal descendant, a lineal descendant of any of his grandparents, his spouse, the spouse of any such descendant, or a step child or foster child of the decedent.

3. (3) "Qualified farm property" means real property that is located in this state, that is included in the gross estate of the decedent under this chapter, and that was acquired by, or passed to, a qualified heir, but only if both of the following apply:

   1. (a) Fifty per cent or more of the adjusted value of the gross estate consists of the adjusted value of real or personal property which, on the date of the decedent's death, was being used for a qualified use;
   2. (b) Twenty-five per cent or more of the adjusted value of the gross estate consists of the adjusted value of real property which, on the date of the decedent's death, was being used for a qualified use.
4. (4) "Qualified heir" means a member of the decedent's family who acquired qualified farm property, or to whom such property passed. If a qualified heir disposes of any interest in qualified farm property to any member of the decedent's family, that member shall thereafter be treated as the qualified heir with respect to the interest.
5. (5) "Qualified use" means the devotion of real property exclusively to agricultural use as described in the definition of "land devoted exclusively to agricultural use" contained in division (A) of section 5713.30 of the Revised Code, whether or not an application has been filed by the decedent or a qualified heir pursuant to section 5713.31 of the Revised Code.

(B)

1. (1) For purposes of determining the value of property included in the gross estate, the value of qualified farm property is, subject to division (D) of this section, whichever of the following the person filing the estate tax return elects:

   1. (a) Its fair market value, as determined pursuant to division (B) of section 5731.01 of the Revised Code;
   2. (b) Its value for its actual qualified use, on the date of the decedent's death or on an alternate valuation date prescribed by division (D) of section 5731.01 of the Revised Code;
   3. (c) Its value for its actual qualified use, as determined under section 5713.31 of the Revised Code.
2. (2) The election shall be made on or before the date by which the return is required to be filed, determined with regard to any extension of time granted pursuant to law for filing the return.

(C)

1. (1) For purposes of this section, the existence of a qualified use may be established, but is not required to be established, by the filing of an application pursuant to section 5713.31 of the Revised Code and its approval by the county auditor.
2. (2) This section applies to any interest in qualified farm property that is held in a partnership, corporation, or trust, if the interest would qualify under this section if it were held directly by the decedent.