LLC uses contractors work. For US based contractors everything is clear; just need to file 1099 and report it accordingly in tax return.

How to report/deduct expenses on contractor's work, if the company-contractor is a foreign-based and pays taxes locally in their country.
Main question is how to report those exoenses on US-based LLC's tax return?

... forgot to mention. The service for US client was conducted outside of US by foreign company-contractor.

You have a U.S. based company. You are using the services of a foreign company or contractor.
If this is correct, then deduct full amount you pay to the contractor. Why should you worry about how much taxes the foreign contractor is paying in the foreign country?

Right. I do not worry about how they pay taxes and I'm planning to deduct it from my taxes. The question is where (e.g. which category) in 1040/Schedule C should I put this deduction.

You would put it in whatever category it belongs -- such as "contractor expense."

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Originally Posted by SEASK

Right. I do not worry about how they pay taxes and I'm planning to deduct it from my taxes. The question is where (e.g. which category) in 1040/Schedule C should I put this deduction.

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There is no line on form 1040 where you can put the expenses directly. You must use some other attachment. In this case you will first do schedule C (Form 1040) and then enter net income in the Form 1040.

How you will treat the business income and expenses, read 1099-Misc income: Your U.S. Tax Return: W2 or 1099: Employee or Independent Contractor.