The adjusted basis is calculated as follows:
Original purchase price: $300,000
Less: Land value ($50,000)
Building value: $250,000
Annual depreciation: $250,000 / 25 = $10,000
Accumulated depreciation by 12/31/2008 (10 years): $10,000 * 10 = $100,000
Adjusted basis on 12/31/2008 = $250,000 - $100,000 = $150,000
Gain on disposition: $750,000 - $150,000 = $600,000
Cost recovery (depreciation claimed): $600,000 - $150,000 = $450,000
Therefore, the gain on the disposition of the rental property is $450,000.