On May 9, 1995, at 1130 Pacific daylight time, a Cessna A185F, N1684R, experienced a loss of engine power shortly after takeoff from runway 33, at the Dorothy Scott Airport, Oroville, Washington. The pilot attempted to return to runway 33 for an emergency landing, however, the airplane collided with trees short of the runway. Visual meteorological conditions prevailed at the time and no flight plan was filed for the local flight. The airplane was substantially damaged and the commercial pilot and her passenger were not injured. During a telephone interview and subsequent written statement, the pilot reported that during the preflight inspection, the fuel tanks were approximately half full. The pilot stated that she rocked the wings then drained fuel from the sumps. All indications were normal for the taxi and takeoff. After the airplane lifted off and attained an altitude of approximately 700 feet, the pilot noted that the Exhaust Gas Temperature (EGT) was rising. The pilot turned the airplane to return to runway 33, and stated that during the downwind leg, the engine lost power and the EGT was at the redline. The airplane was unable to make it to the runway and collided with trees short of runway 33. On May 17, 1995, a Federal Aviation Administration Inspector from the Renton, Washington, Flight Standards District Office, inspected the engine and stated that approximately two tablespoons of water were found in the gascolator. Water was also found in the reservoir tank. A local mechanic stated that the day after the accident, he had drained some fuel from the gascolator and reservoir tank and reported that water was visible. A temporary fuel tank was installed on the airplane and the engine was started. The engine ran for several minutes from idle power to 1700 rpm. A magneto check was performed with a 50-75 rpm drop. The Inspector reported no noted abnormalities. Inspection of all four fuel filler caps revealed that all four fuel cap seals were deteriorated and cracked. The seats also showed signs of corrosion. The aircraft and engine logbooks indicate that an annual inspection was completed on May 1, 1995. The logbooks do not indicate that Airworthiness Directive AD84- 10-01 R1 was complied with. This AD addresses the prevention of water contamination due to leaking fuel cap seals.