Will I be saving myself effort and money in the long run by having him only pay me $599 since a 1099 is not required under $600?
I strongly suspect yes, especially if it's a cash deal. Given that you'll be saving yourself and your buddy some work ask him to buy you a few cases of beer or steaks on the side to make up the difference. If a 1099 is never generated the only way anything will happen is if you're audited and that is very very very unlikely. Even then we aren't talking about massive penalties.
Poodle is a practicing CPA and probably can't agree with the above for professional ethical reasons, but I doubt many CPA's would disagree privately over a glass of beer. Of course, for you not to pay the income tax anyway would still be illegal but that's up to you.
This post was edited on 10/9 at 4:41 pm