On July 16, 2001, approximately 1755 Pacific daylight time, a Piper PA-12 floatplane, N918TF, registered to an individual, and being flown by a private non-floatplane rated pilot accompanied by a floatplane rated airline transport rated flight instructor, sustained substantial damage when the aircraft impacted a log during step taxi in daylight conditions on the Willamette River, Oregon City, Oregon. Both pilots exited the aircraft as it sank, and were uninjured. Visual meteorological conditions existed and no flight plan had been filed. The flight, which was instructional, was operated under 14CFR91, and originated locally on the late afternoon of the accident. The airline transport rated pilot, a certified flight instructor, reported that the pilot under instruction (seated forward) had just landed on the Willamette River, reversed direction and was step taxiing to takeoff when the aircraft's right float impacted a tree stump protruding approximately 15 inches above the surface of the water. He stated that he felt the impact and the aircraft's right float became airborne while the left wing dipped. The left wing then impacted the water and the aircraft came to a stop upright in the water. The right float, which had been breached, began to fill with water and the aircraft gradually nosed over while sinking. The engine was shut down and both pilots evacuated before the aircraft became inverted (refer to attached statements of both pilots). Clackamas County Sheriff's personnel reported locating a deadhead (submerged log) in the river measuring 1.5 to 2 feet in diameter and oriented with the end of the log protruding from the surface of the river and downstream. Additionally, white paint transfer and a small piece of embedded aluminum were noted at the log's end (refer to attached Sheriff's report). The log had no marking or identifying buoy.