Consult with your accountant about these issues.
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Yes you can report that the 1099 income is yours if it is truly yours. However, the IRS is going to send out a notice when your cousin does not report all of the income reflected on his 1099. Therefore you should (i) work with a competent tax return preparer for both your return and your cousin's and (ii) clean up with PayPal accounts so that this does not occur in the future.
I agree with Mr. Givner. Your cousin can avoid a IRS notice by reporting the income and then reporting the portion of the income that is yours. Your cousin would issue a form 1099 of some sort to you.
Going forward, get this all in the name of the proper entity conducting the business.
Marty Davidoff, firstname.lastname@example.org, 732-274-1600. This answer is provided for general information only. You should seek advice from an attorney or tax professional.
Since the income is your's you are required to report it. However, even if you report the income, your cousin will still have issues because Paypal will also notify the IRS of his income; so both of you need to file to ensure proper reporting.
Please note the information in this email does not constitute legal advice and is solely based upon general information questioned.