well , yes and no. I say yes because this matter of exchange rate caused loss/gain is dealt at length in section 986 and 987 of the IRS Regs -- though the focus there is on qualified Branch units and not on individual tax payers. One would hope the same logic would apply. Going through the all the congressional reports, IRS and industry comments etc. what comes out ( in general ) :
(a) Exchange gain or loss is recognized upon a remittance,
(b) Both .... earnings and .... capital can give rise to exchange gain or loss under section 987
(c) The currency gain or loss taken into account under section 987 is only the economic gain or loss “inherent in” the assets and liabilities of a QBU.
Therefore my conclusion is that the extra tax liability that you incurred due to exchange rate fluctuation, is real ( not notional ) and must be recognized. Thus there is no relief that you can request/ assert on this. My basis for this position are item (a) and "economic gain or loss “inherent in” in (c) above. I am sorry this does not help you and it does not seem fair from certain perspective. My apologies
