Scald milk in pan over low heat (be careful to not let it overflow as that would be very messy) and add sugar (keep 1 teaspoon of sugar aside for the yeast mixture) butter and salt, stir and and allow to cool. Set aside.
In a bowl combine luke warm water, yeast, and sugar and let sit for at least 5 minutes or until the yeast starts to work and bubbles are appearing.
Add the sifted flour, nutmeg, eggs, milk mixture and yeast mixture and mix thoroughly. (If you have a dough hook on your mixture that would work fabulous, or just mix by hand or with a fork, slowly until it is all incorporated.) Start out by adding the flour a little at a time. I used about 4 and ¼ cups flour until the dough began to come together well. It just depends on the humidity and type of flour you are using. Bring the flour to a ball. Knead the flour for about 3 minutes just until worked through. (Do not over knead as then your dough will be tough) Make the dough into a ball and place in a well greased bowl with plastic wrap over it and allow it to double in size. The rising process should take about 30-45 minutes in a warm place.
Flour your clean counter and roll out dough about ½ inch (about the thickness for cutout cookies). I used a glass cup for the circle and a bottle top for the hole. (If you actually have a donut cutter, that would be great but not needed). Repeat with the rest of the dough until you have cut out all the dough. Save the hole as these a great fried up too.
Place a tea cloth over your donuts and allow them rise for the second time until they double in size about 30-40 minutes.
Heat your cooking oil in a pan until it gets up to about 375 F or until your wooden chopsticks start to bubble. I suggest you start out with just one donut or donut hole to check for temperature. If it is too hot it will burn/brown on the outside before the inside has a chance to cook. If the oil is not hot enough it will just absorb al the oil and be very greasy.
While you are waiting for the oil to get to the right temperature, make the donut glaze. In a medium bowl combine 2 cups of powdered sugar, milk and vanilla. Stir until smooth. Set aside.
Deep fry the donuts a few at a time until golden brown and reove from oil to set on a paper towel to drain. While the donuts are still warm, dunk the donuts into the donut glaze bath. (If you prefer, make a mixture of sugar and cinnomen and dip the donut into the sugar mixture on all side. Repeat with the remaining donuts.
Serve donuts with milk, coffee/tea or a delightful glass of cider. Enjoy!
Best if eaten in 24 hours but can keep in the refrigerator in a sealed container for 3 days.