When you take part in an ICO you are sending some coins (usually ETH) to the ICO owner's address and later receive some predetermined amount of tokens in return. Since there is no way for Koinly to know that the two transactions (send and receive) are connected, you will have to tell Koinly how much you paid for the received tokens - otherwise Koinly will assume you paid the market price.
Make sure you have added both the 'send' transaction (to take part in the ICO) and the 'receive' transaction (for received tokens). For ex. in the image below we pay 1 ETH to take part in the ICO of LifeCoin and receive 500 LIFE tokens on 1st Aug. We later sell the LIFE tokens for a price of $100.
The problem here is that Koinly assumes you bought the LIFE tokens at the market price on 1st Aug which was $0.04 and therefore you end up making a profit when you sell the LIFE tokens - even though you actually made a loss here since you paid $200 worth of ETH to take part in the ICO.
To fix this, first copy the market value of the ETH transaction ($200).
Then, edit the LIFE transaction and click on the 'change' button:
Enter the value that you copied in the previous step and press Save.
That's it, now your LIFE tokens will have the correct cost associated with them. Here's the result:
Should I use the market price at the time I participated in the ICO or at the time I received the tokens?
Since you might end up receiving tokens a long time after you participated, the market price you use can have a big effect on your taxes when you sell them. Due to a lack of clear guidelines, it is difficult to say with certainty which is the correct price to use. However, most people tend to use the market value at the time of participation.
What if my purchased tokens were distributed (vested) over a period of time?
If you took part in an ICO, but will not be getting the new coins in one transaction, but in multiple transactions across several months (vesting), then the steps from this article can still be followed, with one adjustment:
In Step 3 you will not be putting the full value of the tokens sent - you will just put a part of it proportionally to how many vesting transactions you'll receive.
If the total amount invested was $200 (as in the above example) and the received tokens were sent in 10 separate batches of 50 LIFE each, then each batch of 50 LIFE tokens would be worth 1/10th of the total amount invested, or $20 for each batch. Once the vesting has finished, the total cost-basis of the received tokens should equal the total amount invested in the ICO ($200).