In a mixing bowl, mix sugar, vegetable oil, and eggs. In another bowl, sift together flour, baking soda, salt, and cinnamon. Fold dry ingredients into wet mixture and blend well. Fold in carrots and chopped nuts until well blended.
Distribute batter evenly into 3 (9-inch) cake layer pans, which have been generously greased. Place in preheated oven and bake for 50 to 60 minutes.
Cool layers in pans, for approximately 1 hour. Store layers in pans, inverted, in closed cupboard to prevent drying. To remove layers from baking pan, turn upside down and tap edge of pan on a hard surface.
Center a 9” cake circle on top of revolving cake stand. Remove paper from bottom of layer cake.
For the frosting
In a suitable bowl of large mixer, place powdered sugar, cream cheese, vanilla, and margarine. Beat at second speed until thoroughly blended. Hold refrigerated and use as needed.
Assembling the cake
Place first layer, bottom side down, at center of cake stand. With a spatula, evenly spread approximately 3½ ounces of frosting on the layer. Center the second layer on top of first layer with topside down. Again with a spatula, evenly spread approximately 3½ ounces of frosting on the layer. Finally, center the third layer on top of second layer with topside down.
Using both hands, press firmly but gently, all layers together to get one firm cake. With a spatula, spread remainder of frosting to cover top and sides of cake.