Family Farm Protection Act of 1981

[AI summary unavailable — showing source text] Family Farm Protection Act of 1981 - Amends the Internal Revenue Code to increase the unified credit against the estate tax from $47,000 to $192,800. Increases from $175,000 to $600,000 the minimum gross estate requirement for filing of a return. Provides that the unified credit against the gift tax shall be increased to $192,800 by specified annual increments through 1985. Repeals the $500,000 limitation on the reduction of the value of qualified real property permitted by the special valuation rules based on use. Allows property leased to a family member to qualify for special use valuation. Qualifies estates of decedents who were disabled or retired for the special valuation of certain farms based on use if such decedents materially participated in the operation of the farm for five out of eight years preceding the year in which they became disabled or eligible for disability benefits under title II (Old Age, Survivors and Disability Insurance) of the Social Security Act. Permits the spouse of a decedent to use such valuation if the spouse has managed the farm or business for ten years preceding the decedent's death before it can be disposed of without incurring a recapture of e…