" Similar conclusions were reached in Kinkead v. Commissioner, 3 Cir., 71 F.2d 522, 523, In re Park's Estate, 2 Cir., 58 F.2d 965, 967, and Voliva v. Commissioner, 7 Cir., 36 F.2d 212; also cf. Appeal of Collin, 1 B.T.A. 305, and Poor v. Commissioner, 11 B.T.A. 781, affirmed without opinion 2 Cir., 30 F.2d 1019. It appears that the petitioner in 1933 held notes of MaCarty which were valid and collectible, if funds were available, but which were in fact worthless from their inception and were known to be so by the petitioner.
However, it does not appear from the record that the $1,575 accrued interest, realized under this theory as income in 1928, was reported as such. Where interest has not been reported as income, the amount thereof cannot be included as a loss. Voliva v. Commissioner, 7 Cir., 1929, 36 F.2d 212. This rule has been consistently followed by the Board of Tax Appeals. Appeal of Collin, 1925, 1 B.T.A. 305; Appeal of Simons, 1925, 1 B.T.A. 351; Hayes v. Commissioner, 1927, 7 B.T.A. 936; Poor v. Commissioner, 1928, 11 B.T.A. 781; Beekman v. Commissioner, 1929, 17 B.T.A. 643; Burke v. Commissioner, 1930, 19 B.T.A. 743; Wourms v. Commissioner, 1932, 25 B.T.A. 671; Searles Real Estate Trust v. Commissioner, 1932, 25 B.T.A. 1115. The principle running through these authorities is that there can be no loss suffered as to that which has never been acquired and that for tax purposes that which has never been reported as income (unless its gain is nontaxable) has never been acquired.
The interest accrued to the partnership and under these undisputed circumstances, the interest deduction is allowable. The cases cited by the government, (Appeal of Charles A. Collin, 1 B.T.A. 305, Poor v. Comm'r, 11 B.T.A. 781, and Crosby v. Comm'r, 27 B.T.A. 1234), are not comparable for the reason that in none of these cases was any interest paid. Plaintiff is entitled to judgment in the sum of $3,484.