Who are you v. who you are

[Jaro7788]

Look, I know we are supposed not to employ any questionary devices while putting a question into a reported speech sentence. We've all been taught that we are expected to report "Who are you?" into "She asked him who he was".

However!

What if we treat the "wh-" part as the subject rather than object. Let's take this example: "I know what is it" v. "I know what it is". Would the first sentence actually be incorrect if we considered "what" to be the subject rather than object?

[Beeesneees]

The first question (I know what is it) is always considered to be incorrect.

What is it?
I know what it is.
I know what is it.
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Cheers m' dears!