Section 22D. For the purposes of determining the amount of gains, but not losses, under the investment privilege excise imposed by section twenty-two B, a qualifying domestic life insurance company, as hereinafter defined, subject to said excise and having admitted assets of less than one billion dollars, at the close of the taxable year, as valued by the commissioner of corporations and taxation in accordance with standards established with respect to annual statements under chapter one hundred and seventy-five, may elect to adjust the basis, as defined in section 1011 of the Federal Internal Revenue Code, of all merger assets, to equal their market value on the qualifying date. Said election shall be irrevocable and made on or before the date for filing, including any extension thereof, the return of the qualifying domestic company for the taxable year ending December thirty-first, nineteen hundred and seventy-seven.

For purposes of this section, a ''qualifying domestic life insurance company'' is a company which, after December thirty-first, nineteen hundred and fifty-eight and before December thirty-first, nineteen hundred and seventy-six, was a party to a reorganization, as defined in section 368 of the Federal Internal Revenue Code and in effect for the taxable year of the reorganization, with another domestic insurance company which was not a life insurance company, as defined by subsection (a) of section 801 of the Federal Internal Revenue Code in effect for the taxable year of the reorganization.

For purposes of this section, ''merger assets'' shall mean stock, other than stock in a party to the reorganization, acquired in the reorganization by the qualifying domestic life insurance company and ''qualifying date'' shall mean the date of the reorganization.