On June 08, 1996, at 0745 mountain daylight time (mdt), a Grumman American AA-1C, N39048, owned and operated by a commercial pilot, was substantially damaged during a forced landing, shortly after takeoff from runway 25 at Custer County Airport, South Dakota, following a loss of engine power. The pilot reported no injuries and passenger reported minor injuries. Visual meteorological conditions prevailed at the time of the accident. The personal 14 CFR Part 91 flight was not operating on a flight plan. The flight departed Custer County Airport, Custer, South Dakota, at 0745 mdt. According to the pilot's written statement, he performed a successful runup and departed runway 25 with a five to seven knot quartering headwind. After takeoff, the pilot noticed a decrease in climb performance. The terrain was downsloping with trees ahead, so he elected to perform a forced landing in a field. He said that the night before the engine was running rough on the right magneto and he corrected the problem by leaning the mixture at full power. The pilot believes there was a magneto failure. A written statement from the left seat passenger stated the airplane would not climb after takeoff and said, "I did hear the stall horn come on and off. We did touch back down on the overrun area, I think for just an instant." A forced landing followed. A local mechanic was flying that day and heard over the unicom frequency "you take it, you take it" at the time of the accident. He flew back to investigate. He examined the engine, and found low compression readings on all cylinders, leaking exhaust valves, a grit residue on the cylinder walls, all four pistons badly scored and burned and excessive carbon buildup on the pistons.