On June 26, 1998, at 1430 hours Pacific daylight time, a North American Navion, N1400Z, experienced a loss of engine power on takeoff from runway 31 and impacted terrain while attempting to return to the runway at the Calaveras County-Maury Rasmussen Field, San Andreas, California. The airplane, owned and operated by the pilot under 14 CFR Part 91, sustained substantial damage. The private pilot was not injured. Visual meteorological conditions existed for the local postmaintenance inspection flight that was originating at the time of the accident, and no flight plan was filed. A witness to the accident stated that the airport is located on a plateau and the area surrounding the airport is unsuitable for an off-field landing. The witness reported that he was working in his T-hangar located approximately 2/3 down runway 31. He heard the pilot taxi out and watched him takeoff. The witness reported that as the aircraft went by him everything looked and sounded normal. He then returned to work and heard the engine go to idle. He went outside and observed the aircraft at the departure end of the runway and approximately 300 feet above ground level (agl). He observed the pilot lower the nose and make a 180-degree turn in an attempt to return to the runway. The witness reported that while the aircraft was in the 180-degree turn it lost altitude. The witness then observed the aircraft in a nose high attitude and stated that the engine "caught and sounded as if it was at full power." He stated that the aircraft gained some altitude, but the engine stopped again. The witness reported that the aircraft impacted the ground at a 45-degree angle on the opposite side of the runway. The pilot stated that no discrepancies were noted with the run-up or takeoff for the test flight. On the climbout, at the departure end of the runway, the engine quit. The pilot stated that he attempted to return to the runway, but the aircraft lost altitude and impacted terrain. In an interview, the pilot stated that he had done some work on the fuel selector. When he put the handle back to reinstall it on the aircraft he inadvertently reversed the handle. The pilot stated that when he selected the main tank the fuel valve for the main tank would have been closed and the fuel valve for the aft tank would have been open. He had filled the main tank with fuel for the test flight, but there was not enough fuel in the aft tank to keep the engine running.