On March 4, 1996, about 1633 Alaska standard time, a wheel equipped Cessna 172, N739YR, was ditched following a loss of engine power, about 12 miles north of Ketchikan, Alaska. The airplane was being operated as a visual flight rules (VFR) local area instructional flight when the accident occurred. The airplane, operated by the first pilot, sustained substantial damage. The first pilot, a certificated airline transport pilot and flight instructor, was not injured. The second pilot, a noncertificated student, received minor injuries. Visual meteorological conditions prevailed. The flight originated at the Ketchikan airport about 1550. In a telephone conversation on March 5, 1996, the first pilot reported to the National Transportation Safety Board (NTSB) investigator-in-charge (IIC) that he was occupying the right front seat and was providing a demonstration of departure stalls to the second pilot who was occupying the left front seat. At the conclusion of the third stall, the first pilot added power about 1,800 feet mean sea level (MSL). The engine did not respond and emergency procedures only restored partial power. The first pilot indicated that he applied carburetor heat during the demonstration of stalls. The airplane continued to descend and the pilot declared an emergency "mayday" over the airplane radio. The pilot selected an emergency landing area near the shore of Betton Island but noticed that the beach area contained large rocks. The pilot then intentionally ditched the airplane about 30 yards from the shore. After touchdown in the water, both pilots swam to shore and the airplane sank. A nearby float equipped airplane responded to the emergency call and picked up the two pilots. After the airplane was recovered from the water, an engine examination was conducted on June 6, 1996, in Ketchikan. The examination was supervised by a Federal Aviation Administration (FAA) airworthiness inspector from the Juneau Flight Standards District Office (FSDO). The engine had been partially preserved after retrieval from the salt water. Gear and valve train continuity was established and thumb compression was evident when the engine was rotated by hand. The magnetos were internally damaged by corrosion. The vacuum pump drive was sheared. The engine oil filter was free of contaminants. Fuel and water was found in the carburetor fuel line. The carburetor inlet screen was free of contaminants. The throttle and mixture cables were attached to the carburetor. The carburetor accelerator pump and floats were undamaged. The carburetor heat assembly was crushed and the carburetor heat control cable was broken about 2 inches from the its attach point on the assembly. The FAA inspector could not determine if the broken carburetor heat cable occurred before or after impact with the water.