I've looked into this a little bit, actually.
There are two parts of flu/covid IFR: fatalities and infections.
For flu fatalities, the CDC does indeed upward adjust the count. They do this by looking at how many people died of pneumonia, and multiplying that by a number. The number is the estimated percent of pneumonia deaths that are from the flu, which they base on historical data.
For flu infections, it's a bit more obtuse. The best I was able to find was this paper from the CDC [1], which says they use a Monte Carlo model to estimate the number of infections.
For Covid, the deaths are based on diagnoses, not necessarily tests. Diagnoses are from symptoms, so it is not completely accurate. Some flu cases could be misdiagnosed as covid cases if you don't do a test. For infections, the numbers are typically based on the results from antibody tests (not Monte Carlo models).
I agree that it's definitely not apples-to-apples comparison, but it's hard to say if the comparison is in favor of flu being more deadly, or covid being more deadly, because there are confounding factors in both directions.
[1] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4603749/