If I loan you $10,000 for any period of time, (days, weeks, decades, it doesn't matter) I do not report that loan to the IRS or state taxing authorities for any reason. There is no reason to. Therefore, I the lender (not you) pay taxes on that money. It's my money, not your's, so you don't report it to any taxing authority either.
When you pay me back, you are paying me *MY* money that I already paid taxes on. I have no taxable income to report. You are paying me money that was never yours, and *YOU* never paid taxes on. So *YOU* have nothing to claim or report either.
