This does not appear to be a question even remotely related to income taxation.
Regardless, if you are a licensed agent, you should consult with an attorney, your managing broker, or other responsible and knowledgeable professional. Real estate licensing laws generally prohibit licensees from splitting or sharing commissions with non-licensees; doing so could subject the licensee to discipline.
many items are settled outside of closing, but state law would dictate if this is permissible
If your 1099-Misc includes the full commission, you must report it as income on your tax return. You would then claim the rebate as other expenses on Schedule C
Real estate agents can't pay a commission to an unlicensed person. But they can rebate part of their own commission to a buyer. Taxation in this situation is exactly as described by @Hal_Al . A rebate can be paid outside closing. What's important is that the agent's 1099-MISC reflects the full amount of his or her commission.
A rebate in this situation is not taxable income to the buyer. Instead, it is treated as a reduction in the buyer's cost basis in the property.
Commission rebates are condoned by the IRS, and are legal in most, but not all, states. An agent should consult with their local realty board as to their own state's rules.
On the Schedule C memo line, one would put "Rebate of Commission" or something similar.