How do a record an inventory transfer when we spin off a new business from an existing business?

Probably use inventory adjustment transactions to adjust the inventory out of one company and into the other.

On both cases, the offsetting account should probably be an equity account.

@jmtx2 

Agreed with @BigRedConsulting, but you mentioned "We have an established business".  Is the existing business an LLC, partnership, or S-corp?  If it's an LLC, how is it taxed - as a partnership or S-corp?  How is the new LLC taxed - as a partnership or S-corp?  Are the owners/partners/shareholders the same in both businesses?  IMO, your CPA should guide you on exactly how to record this.    

Both LLCs are owned and taxed as sole proprietor, by the same person. (My wife). I am asking here because we can't find a CPA who will even return our calls.

@jmtx2 

As @BigRedConsulting suggested, record the transfer as a reduction in equity for the business that you are removing inventory from and an increase in equity in the business receiving the inventory. They will cancel each other out since these are both SPs and are disregarded entities from a tax perspective, which is what you want.  As SPs, you only need one equity account called “Owner’s Capital”.  Some people use Owner’s Draws or Owner’s Contribution. Either way works.