1) Preheat the oven to 350°F. Lightly grease and flour a muffin tin. You can also line the muffin tins with papers, and spray the insides of the papers.
2) To make the cupcakes: In a large mixing bowl, whisk together the sugar, flour, baking powder, nutmeg, and salt.
3) Add the butter and beat with an electric mixer at low speed, until the mixture looks sandy.
4) Combine the milk and vanilla and add, all at once. Mix at low speed for 30 seconds, then increase the speed to medium and beat for 30 seconds. Scrape the bottom and sides of the mixing bowl.
5) With the mixer running at low speed, add 1 egg. Increase the speed to medium and beat for 30 seconds. Add the second egg, again beating for 30 seconds.
6) Scrape the bottom and sides of the bowl, and beat briefly, just till smooth.
7) Scoop the batter by heaping 1/4-cupfuls into the prepared muffin tin. A muffin scoop works well here.
8) Bake the cupcakes for 23 to 25 minutes, until they've domed, and are a light golden brown around the edges. They'll spring back when pressed gently on top, and a toothpick inserted in the center will come out clean.
9) Remove the cupcakes from the oven, and place on a rack to cool completely before icing.
10) To make the icing: Combine the butter, cream cheese, vanilla, and lemon oil in a medium-sized bowl, and beat them together until light and fluffy.
11) Add the sugar gradually, beating well.
12) Beat in the milk a little at a time, until the frosting is a spreadable consistency.
13) Spread each cake with icing, and immediately dip in gold, purple, and green sparkling sugars, covering about 1/3 of the cupcake with each color sugar.
14) Store at room temperature for several days. For longer storage, wrap well and freeze.
Yield: 12 cupcakes.