In a large bowl cream sugar and butter with an electric mixer to form a grainy paste. Add eggnog, vanilla extract and egg yolks and beat at medium speed until smooth. Add flour mixture and beat at low speed just until combined. Do not over-mix. Drop by rounded teaspoonsful onto ungreased cookie sheets 1 inch apart. Sprinkle lightly with nutmeg. Bake for 23 to 25 minutes or until bottoms turn light brown. Transfer to cool, flat surface immediately with a spatula.