Deductions & credits

Your Sch C will report the income from all sources  and then the payouts to the participants and any other costs that you incurred.   Since they did not work for you then the 1099-misc forms should report the payout in box 3  NOT box 7  and you should issue them now even though they are late.   DO NOT use the contract labor section instead  make your own category in the misc expenses section.