If you want to allocate the interest differently for tax purposes (such as your proposal that you want to split the income 50/50), it's possible to do so, but it involves quite a bit of paperwork. The person who received the 1099-INT needs to file Form 1040 Schedule B and subtract the amount of interest that should "belong" to the other person as a "Nominee Distribution", and then issue their own 1099-INT to the other person for that amount of interest, so that the other person can appropriately list it on their own return. For details, see the section on "Nominee distributions" in Publication 550.
A simpler way, if you are all in similar tax brackets is for the one who received the income to report it on his return and have the others gift to him the amount of money that offsets the extra tax paid.
