In a bowl, combine flour, 1/4 cup sugar, baking powder, baking soda, salt and nutmeg.
In another small bowl, combine/whisk together 1/4 cup oil, buttermilk and the egg; mix well to combine, add to flour mixture, and mix until very well combined with a wooden spoon.
Drop by teaspoonfuls into 6 cups hot oil (375 degrees); fry about 1-1/2 - 2 minutes, or until very light golden brown.
Remove, and drain on paper towel.
Roll in 1/2 cup sugar, mixed with cinnamon.
Note: It is impotant to keep the oil temperature at a steady 375 degrees, otherwise the doughnuts will be overdone, and won't have a light texture.