Sheetrock in a window
 

Is it ok to use sheetrock in a kitchen window above the sink

Yes, it is.

If you have the older aluminum framed windows, they sweat with the cold weather, and can mold and mildew the sheetrock. In that instance you should use a plastic cap that can be put onto the sheetrock that buts up to the window. If you have vinyl framed windows, then you can put the rock right up to it without nearly as much worry about moisture.

I wouldn't recommend it. I'd use wood trim....