I received a 1099misc from Zenfolio, which is normal but then received a 1099K from from Paypal as my funds from Zenfolio were distribited thru my paypal account. This looks like a problem as its doubled my 1099 income.....has anyone seen this and how did you report it on your taxes?

Take a look at this article, which discusses your exact problem:

http://www.internetbiztaxtips.com/2012/01/what-if-you-receive-two-form-1099s-reporting-the-same-income/

Bear in mind, however, that I am not a tax expert and I therefore cannot vouch for the accuracy of this article.  Take it for what it's worth.