Can someone operate multiple closely held corporations and have one
corporation pay another corporation?....instead of having a division
pay another corporation? What if the 2nd corporation was not in the
same line of business? (Co #2 would record the payment as revenue etc)

Are you asking if funds can be transferred between the companies
without there being an underlying business transaction, say, payment
for goods or services?

I am callin IRS on your a&& - just for fun!