Since the 1099K is not actually entered on your return as an individual item and should be already accounted for with the rest of the income from a business, you can just keep the form with your taxes with an explanation that your wife is using your PayPal account and show that the income is accounted for on her return.
For the future, it may be easier if she gets her own PayPal account because of the new 1099K reporting rules.
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