Combine butter, egg and sugar and put aside. Mix the flour, baking powder, salt and nutmeg.
Mix the two sets of ingredients alternating with milk. Fill greased donuts tin, about ⅔ full (we found our tin at Chef Central). Bake at 350°F for 25 minutes depending on size of pan. Sprinkle with powdered sugar.
Recipe by Scordo.com - Italian Food Recipes and Lifestyle at http://www.scordo.com/recipe/baked-italian-donuts.html