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For instance, suppose there are two American armies and two Soviet armies defending American-owned Sinkiang, which is attacked by the Japanese. The Japanese inflict two casualties and "back off." Who absorbs those two casualties, or are they split one and one between the Americans and the Soviets?

My way of playing is that the owning power (America in this case) absorbs casualties until they are wiped out, then the allies absorb the remainder.

Do any of the rule books for the different variations say differently? If so, what do they say?

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According to page 19 of the rulebook at https://www.wizards.com/avalonhill/rules/axis.pdf

Defending together - when a multiple force is attacked, the attacker fires first as usual. If a hit is scored, the defenders mutually agree which unit is chosen as the casualty (if they cannot agree, the attacker chooses). When counterattacking, each defender rolls separately for his or her units (including casualties).

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