Many of the things you listed, such as paying the costs of completing the project, and paying the employees would be deductible as business expenses. Any business type expenses that Partner B spent the money on would also be deductible if you are reporting the income it came from on your return.
The IRS requires you to File Form 1099-MISC for each person to whom you have paid during the year at least $600 in services performed by someone who is not your employee. However, you should consult with a tax professional before you do so, to verify that the amount is proper given the facts and circumstances of the payment.
About Form 1099-MISC, Miscellaneous Income
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