Taxes on one time investment sale

[Jeff Womack]

A buddy was thinking of selling his former residence that was in disrepair from years of renting.  I love doing home improvement and struck up a deal with him.  He agreed to sell the home to me for an agreed upon price without forcing an actual sale.  We drew up a personal contract and he added me to title.  This allowed me to renovate the home with my finances without having to purchase the home with Cash or hard money (condition of home couldn't be financed).  The agreement is that he would pay off the mortgage and would net the difference up to the agreed upon sales price.  The costs and fees associate with selling the property and proceeds beyond the agreed upon sale price would be mine alone.  I didn't set up a partnership or anything like that and intend on just claiming the income earned on schedule D since I don't think it applies to capital gains. 

After 6 months the home is ready to close and title is asking how to split up the 1099's. I'm being told by escrow they issue a 1099 for the sales price and will either issue the entire amount under my name or split it equally between the two of us.  They also say they will issue another 1099 for the net proceeds from the sale for each of us. Should I split the 1099 in half?  Does it even matter since they issue another one showing proceeds? I'm a bit confused by this.

Any tips or insights I should take into account?