Contractor Deduction / Reimbursement

I have a contractor to whom I will need to 1099 at year's end.  A few third parties have contributed to help absorb the cost.  On my schedule E do I:

 

A) Claim their contributions on income line 3 and then 1099 the full amount that I paid the contractor?

 

B) Only claim and 1099 the contractor the net out-of-pocket amount?

 

C) Some other solution?