Our family's dairy farm is selling and we'd like to buy a lot and build a house - how do avoid capital gains

I recently took a class where we were told repeatedly, "if you sell your family farm, you can put that money in a trust or self-directed IRA and Roth IRA to avoid paying capital gains tax. Today I started calling around and was told we would have to pay capital gains taxes unless we do a 1031 exchange.  We can't buy a like property and live in it if we do a 1031 exchange.  So that's out.  We were told to let the trust own the house and pay for everything out of the trust.  So, what IS a way we can avoid paying so much in capital gains?  The farm's been in the family over 200 years, the tax base is only $1000 but we should profit about $3M on the sale.  It's now in an S-Corp and will be divided between all the siblings.

It's so frustrating trying to get the same answer twice.

Definitely not my area of expertise but if the farm has been in the family for 200 years, wouldn't there have been some step-up in basis along the way as prior owners passed on and left their sharers or interest to future generations? It sounds like you need a good tax accountant who is well versed in family business transfer and sale and that's not really the focus of this board.  On the bright side, long term capital gains tax rates are much lower than ordinary income taxes, at least at the federal level, state taxation may vary from state to state quite a bit.