In the discussion around this question about gift tax it was said that a loan must be at market rate, or it is not considered a loan.
Respecting the wisdom of the people who said that, I'm unclear about how this would work in the general case, since plenty of people do make interest free loans to family and friends, and the IRS would seem to be unlikely to be in the business of policing loan rates.
Ignoring the issue in the original question about later paying off the loan through a gift, let's say I make an interest free loan to someone, with the genuine intention that they pay it back in full at some later date, and with no intention of cheating the tax system. It would seem to me that he has no income to declare (because only the loan has occurred) and I have no income from the transaction. What exactly do he and I have to declare on our tax forms? Some links to tax office docs would be nice.
EDIT: Since it's been pointed out that it's hard to distinguish between loans and gifts, let's imagine that both parties have made a written loan agreement.