Yes. PayPal is supposed to send you a 1099 and report the transaction
On a related note, eBay is now sending 1099-K’s to sellers who receive over $600.
They overhauled their money system so that payouts to sellers now come directly from eBay rather than through PayPal. Buyers can still pay through PayPal but sellers get payed directly from eBay. I guess eBay thought this was necessary to comply with the new 1099 regs.