Sift flour, soda, salt and nutmeg together. Cream butter and sugar in large bowl of mixer at med speed for 4 minutes. Add egg and beat on med 1 minute. Alternate adding dry ingredients in thirds and water twice; mix an additional 1 minute after dry additions and « minute after liquid. Refrigerate 4 hours or overnight. Preheat oven to 425. Roll dough 1/8-inch thick on well-floured board. Keep dough chilled while working portions. Cut desired size, sprinkle with sugar and bake on cookie sheet about 10 minutes. Remove from sheet and while hot to cool on rack.
