Pour the sugar into a saucepan and put it on the stove over low heat. Stir with a fork until the sugar has melted but is still pale. Then stop stirring, and let it cook until it is a deep golden colour.
Mix the bourbon in a cup with 1/2 cup of water (4 oz / 125 ml.)
Remove the melted sugar from the heat, add the bourbon and water mixture carefully, tilting the pan and drizzling it down the sides of the pan. Be careful, as the hot sugar will bubble and may give off steam.
Put the sauce back on the heat, and stir until the caramel has dissolved into the bourbon and water. Add the butter, stir it in until completely dissolved.
Remove from heat. Let cool a bit before using. If the sauce gets too thick or hard to serve by the time you go to use it, zap it briefly in the microwave.