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Preheat oven to 350 degrees F. Line a 12-cup muffin or cupcake pan with paper liners, and coat liners with non-stick cooking spray.
In bowl of electric mixer, combine flour, SPLENDA Sugar Blend,milk powder, baking powder, baking soda, and salt on low speed. Add trans-free margarine and yogurt and beat on medium speed 2 minutes, or until ingredients are thoroughly combined.
In a cup, whisk egg, water, and lemon extract. Add to batter and beat until smooth. Spoon batter into prepared cups.
Bake 20 to 25 minutes, or until cupcakes spring back when lightly pressed. Remove to wire racks and cool completely.
Combine confectioner's sugar, lemon juice, and water. Drizzle evenly over cupcakes.