On October 2, 1999, about 1440 Eastern Daylight Time, a Cessna 172, N6921X, was substantially damaged during takeoff from Lakes Region Airport (8B8), Wolfeboro, New Hampshire. The certificated flight instructor and student pilot were not injured; and a passenger sustained minor injuries. Visual meteorological conditions prevailed, and no flight plan was filed for the local instructional flight conducted under 14 CFR Part 91. The flight instructor stated that he completed some "airwork" and landed at 8B8. He decided to do one more takeoff and landing, and departed on Runway 30. About 200 feet above-ground-level the engine quit, and the pilot ditched the airplane in Lake Winnipesaukee. After the accident, he moved the fuel selector from "BOTH" to "OFF". He added that before the accident, he flew .7 hours according to the tachometer. The airplane was removed from the lake and placed in a hangar. On October 4, 1999, a Federal Aviation Administration Inspector examined the wreckage. He drained approximately 11 gallons of fuel from the fuel tanks. He did not find any pre-impact mechanical malfunctions. Subsequently, the airplane's owner examined the wreckage with the assistance of a mechanic. They did not find any pre-impact mechanical malfunctions.