They can report the 1099-MISC this way since the rent was first paid to you.
Then you report the expenses, such as the management fees.
You'll also need to back out the security deposit since that is not income unless it is used for the last months rent, in which case it is claimed as income in the year it is forfeited. Report it as a "Security Deposit Liability Expense" to remove it as income for this year.
Be sure to include it as income if you keep it, but hopefully the tenants will be great and the security deposit will eventually be refunded to them.
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