In a medium mixing bowl, stir together flour, baking powder, salt and nutmeg; set aside.
In a medium bowl, whisk together sugar and butter.
Add egg yolks to sugar mixture and whisk until light and thick.
Gently stir in the sour cream and flour mixture alternately in three additions starting and ending with the flour mixture. If dough is too sticky, add a bit more flour; 1 tbsp should do. Cover and refrigerate until firm; about an hour.
In a heavy bottom frying pan, pour canola oil until at least 2" deep and heat. Prepare a tray lined with paper towel; set aside.
While oil is heating, tip dough out on floured surface or between two parchment sheets, and roll to 1/2" thick. Cut out donuts and holes. I used a 3" donut cutter and was able to get 13 donuts and holes. After cutting out first set, re roll dough and be sure to refrigerate dough if it becomes too soft.
When oil is heated to 325 degrees F, drop donuts in pot and fry for 2 minutes. Flip and fry for an additional 1 minute. Do not overcrowd pot. Three at a time is my rule of thumb.
Place fried donuts on paper towel lined tray.
Prepare glaze by combining all ingredients in a bowl. Whisk gently until smooth. Glaze should be opaque and coat the back of a spoon; not too thick and not too runny.
Place donuts on wired rack with a cookie sheet or plastic wrap underneath.
Submerge donuts and holes one at a time in glaze and place on wired rack to set for 20-30 minutes.