1099 Contractor Question for Newbie

[Bruce Gardner]

Are the costs of a 1099 contractor fully tax-deductible in the process of doing business on rentals, BRRRR, or flips?

More specifically, I'm looking at entering into an agreement with a contractor where their fee will be 50% of the net income derived from the property.  For example, if I have a rental that collects $1,000/month, payout $500 in expenses, then another $250 to the contractor (keeping $250 as profit)...is the $250 paid to the contractor considered an expense and fully deductible as a write-off?

At what point does the IRS say that the contractor is not a contractor but instead is a partner, so their payment is not tax deductible as a business expense?