Ben owns and operates a bar (an LLC), and the income is reported on a Schedule C. He doesn't charge his friends and family for food or beverages; however, he includes the cost in his expenses.  Ben takes cash out of the register every day to pay his personal financial obligations.  Ben's argument with his tax professional is that the money he earns is his money and the money he takes from his business is part of his original investment in the business; therefore, not taxable.  Ben has no records to support the amount of money he originally invested in the business, nor does he have records that support loans, obtained for the business, or how much he has taken out of the business.

What would result in a penalty for unreasonable position?