Why can't I kill a timeout called from a Bash script with a keystroke?

Signal keys such as Ctrl+C send a signal to all processes in the foreground process group.

In the typical case, a process group is a pipeline. For example, in head <somefile | sort, the process running head and the process running sort are in the same process group, as is the shell, so they all receive the signal. When you run a job in the background (somecommand &), that job is in its own process group, so pressing Ctrl+C doesn't affect it.

The timeout program places itself in its own process group. From the source code:

/* Ensure we're in our own group so all subprocesses can be killed.
   Note we don't just put the child in a separate group as
   then we would need to worry about foreground and background groups
   and propagating signals between them.  */
setpgid (0, 0);

When a timeout occurs, timeout goes through the simple expedient of killing the process group of which it is a member. Since it has put itself in a separate process group, its parent process will not be in the group. Using a process group here ensures that if the child application forks into several processes, all its processes will receive the signal.

When you run timeout directly on the command line and press Ctrl+C, the resulting SIGINT is received both by timeout and by the child process, but not by interactive shell which is timeout's parent process. When timeout is called from a script, only the shell running the script receives the signal: timeout doesn't get it since it's in a different process group.

You can set a signal handler in a shell script with the trap builtin. Unfortunately, it's not that simple. Consider this:

#!/bin/sh
trap 'echo Interrupted at $(date)' INT
date
timeout 5 sleep 10
date

If you press Ctrl+C after 2 seconds, this still waits the full 5 seconds, then print the “Interrupted” message. That's because the shell refrains from running the trap code while a foreground job is active.

To remedy this, run the job in the background. In the signal handler, call kill to relay the signal to the timeout process group.

#!/bin/sh
trap 'kill -INT -$pid' INT
timeout 5 sleep 10 &
pid=$!
wait $pid

Building on the excellent answer provided by Gilles. The timeout command has a foreground option, if used then a CTRL+C will exit the timeout command.

#!/bin/sh
trap 'echo caught interrupt and exiting;exit' INT
date
timeout --foreground 5 sleep 10
date