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The income for the 3rd business would be $ 472.97.
The cash transfers from the other businesses are not revenue & are not included in Business # XXXXX's sales.
Thank you Stephen,
What do I do with the $5129 that came from the other businesses. Is it an expense for them? This IRS seems to think because the money was transferred its automatically income?
Again, thank you
No. It isn't expense for the transferor business either. It is just money taken out (draw) or money put in. Not income or expense to either business.
You should be able to show them the withdrawal from one business (either by transfer or check) and the deposit in business #3.
If this doesn't do it, you'll have to talk to the auditor's supervisor; hopefully not.