Beat butter at medium speed with an electric mixer until fluffy; gradually add sugar, vanilla, and vinegar, beating well. Add eggs, 1 at a time, beating until blended after each addition. Add food coloring, beating until combined.
Combine flour and next 3 ingredients; add to butter mixture alternately with buttermilk, beginning and ending with flour mixture. Beat at low speed until blended after each addition. Pour into 2 greased and floured 9-inch cakepans.
Bake at 350° for 20 to 22 minutes or until a wooden pick inserted in center comes out clean. Cool in pans on wire racks 5 minutes; remove from pans, and cool on wire racks.
Spread Cream Cheese Frosting between layers and on tops and sides of cake.
This is the same basic recipe for Red Velvet I have been making since I was a girl. It is the traditional Southern recipe. It is delicious.
My only note would be that the directions seem 'off.' I agree with all of it EXCEPT the vinegar and baking soda should be combined in a separate small bowl and then mixed in, by hand, after you finish using your machine- then poured into prepared pans and baked immediately. That is what gives the cake a light and fluffy texture.
I imagine that mixing the vinegar in early and by itself is a large part of why other reviewers thought the cake was NOT good or had a hard/dry texture.
The recipe is sound- the directions are just out of whack!
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