Ragman is correct.
Me thinks since the 1099 is in a company name you will file 3 returns. 1 for company, and 1 for each of you,but don't listen to me get an accountant.
Most owners are honest,but yes you will encounter a bad one,once in awhile. I have been lucky and only found one bad out of five good owners.So one out of six.
I am not a tax person so I don't claim to know for certain,but just for fun allow me to make a guess.I think the answer might be,no it is not deductible. Yet I hope I am wrong.
Webbly may be from another country but he gave the correct information he said go to the source of the problem to get your answer. By the way W-2 has nothing to do with a 1099