In a large bowl, cream the butter, shortening and sugar until light and fluffy. Add eggs, one at a time, beating well after each addition. Sift together flour and baking powder; add alternately to creamed mixture with milk and extracts, beating on low speed just until combined. Fold in nuts.
Pour into a greased and floured 10-in. tube pan. Bake at 325° for about 1 hour 25 minutes or until a toothpick comes out clean. Cool on a rack for 10 minutes before removing from pan to cool completely.
In a small bowl, combine frosting ingredients; spread over cake.