Actually 999 MB is correct. Mega is an SI prefix meaning 10^6.
What you described is a binary prefix mebi, which means 2^20.
The use of the term "megabyte" to refer to the other measure predates the coining of "mebibytes," which is used by rather few people. And as you can see on that page, at least one standards body still uses "megabytes" for the power-of-two units.