It would be hard to establish that expenses properly allocable to disposition of the currency are 212 expenses if the idea is to relate them back to the sale of the foreign rental property. So that leaves the possibility that they are properly allocable to converting the rental farm to a rental residence. I guess that means researching how, for example, to establish that expenses relating to an existing investment can be deducted if they were incurred in a failed attempt to make that investment more profitable. If research shows, e.g., that expenses to try to convert a U.S. rental farm to a U.S. rental residence would be deductible because they are allocable to a 212 activity, the same should apply outside the U.S.
RR 90-79 involved sale of a personal residence at a gain and the payoff of a loan on it at a currency loss, and held that the two were separate personal transactions, a taxable personal gain and a non-deductible personal loss. THe Quijano case cited the RR with approval.