Prepare the Cake Layers:

1. Preheat and Prep: Preheat your oven to 350°F (175°C). Grease three 9-inch round cake pans with butter or cooking spray, line the bottoms with parchment paper rounds, then grease the parchment. Lightly dust with flour and tap out excess. This ensures easy cake release.
2. Mix Dry Ingredients: In a medium bowl, whisk together the flour, baking powder, and salt until well combined. Set aside.
3. Cream Butter and Sugar: In a large bowl using an electric mixer (or stand mixer with paddle attachment), beat the softened butter and sugar together on medium-high speed for 3-4 minutes until very light, fluffy, and pale in color. This incorporates air and creates tender cake texture. Scrape down the sides of the bowl as needed.
4. Add Eggs: Add the eggs one at a time, beating well after each addition. Make sure each egg is fully incorporated before adding the next. The mixture should look smooth and creamy.
5. Combine Wet Ingredients: In a measuring cup or small bowl, whisk together the coconut milk, sour cream, vanilla extract, and coconut extract until smooth.
6. Alternate Adding Ingredients: With the mixer on low speed, add the flour mixture in three additions, alternating with the coconut milk mixture in two additions. Begin and end with the flour mixture. Mix each addition just until incorporated—don’t overmix. The batter should be smooth and thick but pourable.
7. Fill Pans: Divide the batter evenly among the three prepared pans (about 2⅓ cups of batter per pan for even layers). Smooth the tops with a spatula. Tap the pans gently on the counter a few times to release air bubbles.
8. Bake: Bake for 28-32 minutes, or until a toothpick inserted in the center comes out clean or with just a few moist crumbs, and the cakes spring back when lightly touched. The tops should be golden and pulling slightly away from the pan edges. Start checking at 28 minutes to avoid overbaking.
9. Cool: Let the cakes cool in the pans on cooling racks for 15 minutes. This allows them to set up. Run a knife around the edges, then carefully invert onto the cooling racks, peel off the parchment paper, and let cool completely before frosting (at least 1 hour). You can speed this up by placing them in the refrigerator.

Make the Frosting:

10. Beat Butter and Cream Cheese: In a large bowl with an electric mixer, beat the very soft butter and cream cheese together on medium speed for 2-3 minutes until completely smooth, creamy, and well combined with no lumps.
11. Add Sugar: Add the sifted powdered sugar one cup at a time, beating on low speed until incorporated, then increase to medium-high and beat for 1-2 minutes until fluffy. The frosting should be thick and smooth.
12. Add Flavorings: Beat in the coconut extract, vanilla extract, and salt. Mix until well combined.
13. Adjust Consistency: Add heavy cream 1 tablespoon at a time until you reach your desired consistency. For spreading between layers and the crumb coat, you want slightly thicker frosting. For the final coat, slightly thinner frosting is easier to spread smoothly.

Assemble the Cake:

14. Level Cakes (Optional): If your cakes domed significantly during baking, use a serrated knife or cake leveler to trim the tops flat for more stable stacking.
15. First Layer: Place one cake layer on your serving plate or cake stand. If desired, place strips of parchment paper under the edges to keep the plate clean during frosting (remove before serving).
16. Add Filling: Spread about ¾ cup of frosting evenly over the first layer, going almost to the edges.
17. Second Layer: Place the second cake layer on top, pressing down gently. Add another ¾ cup of frosting and spread evenly.
18. Top Layer: Place the final cake layer on top, pressing down gently to secure. Make sure everything is level and stable.
19. Crumb Coat: Spread a thin layer of frosting all over the entire cake—top and sides. This is called a crumb coat and seals in any loose crumbs. It doesn’t need to look perfect. Refrigerate for 30 minutes to set the crumb coat.
20. Final Frosting: Once the crumb coat is firm, spread the remaining frosting generously over the entire cake, creating a smooth, even layer on the top and sides. Use an offset spatula or bench scraper for the smoothest finish.
21. Coat with Coconut: While the frosting is still soft and sticky, gently press handfuls of shredded coconut all over the cake, covering the entire surface—top and sides. Pat gently to help it adhere. Use as much coconut as you like for your desired look!
22. Chill and Serve: Refrigerate the finished cake for at least 30 minutes to set the frosting before slicing. This makes cutting much neater. Let the cake sit at room temperature for 15-20 minutes before serving for best flavor and texture.