Sift together first 3 ingredients. Set aside. Line 3 lightly greased 9" round ake pans with parchment or waxed paper; lightly grease the paper.
Beat sugar and oil at medium speed with an electric mixer until smooth. Add eggs, 1 at a time, beating until blended after each addition. Add flour mixture, beating at low speed just until blended and stopping to scrape down sides. Fold in carrots and 1 cup of nuts. Spoon batter evenly into prepared pans.
Bake at 350 degrees for 30-35 minutes or until a wooden pick inserted in the center comes out clean. Cool in pans on wire rack for 10 minutes; remove from pans and cool completely on wire racks.
Spread cream cheese frosting between layers and on top and sides of cake. Arrange remaining ½ cup of nuts around outer edge of cake. Cut with a serrated knife.
Cream Cheese Frosting:
Beat cream cheese and butter at medium speed of mixer until fluffy; gradually add in powdered sugar, beating well. Stir in vanilla.