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When using a timeout with check_output(), the call does not terminate unless the child process generates output after the timeout. Looking at the code, it appears there is a second call to communicate() after the timeout has happened, presumably to retrieve any remaining output. This call appears to hang until the child process generates output.
I have two test cases (for Python 2.7 / subprocess32 and Python 3 / subprocess respectively). They show the same behaviour, the Python 2.7 version has been reproduced on Ubuntu 16.04.3 and Centos 7 and the Python 3 version on Ubuntu 16.043.
Each test case has a first example where bash executes a long sleep before generating output and where the timeout is not respected, and a second example that generates output at intervals and the timeout is respected.
Relevant code also attached below for reference:
then = time.time()
print("Subprocess with idle stdout at timeout: start at {}".format(then))
try:
 output = subprocess.check_output(["bash", "-c",
 "echo Subcall; sleep 5; echo Done;"],
 stderr=subprocess.STDOUT, timeout=1)
 now = time.time()
 print("Finish at: {}, {:.0f} seconds".format(now, now-then))
 print(output)
except subprocess.TimeoutExpired as te:
 now = time.time()
 print("Timed out at: {}, {:.0f} seconds".format(now, now-then))
then = time.time()
print("Generating stdout from subprocess: start at ", then)
try:
 output = subprocess.check_output(["bash", "-c",
 "echo Subcall; for i in 1 2 3 4 5; do sleep 1; echo $i; done; echo Done;"],
 stderr=subprocess.STDOUT, timeout=1)
 now = time.time()
 print("Finish at: {}, {:.0f} seconds".format(now, now-then))
 print(output)
except subprocess.TimeoutExpired as te:
 now = time.time()
 print("Timed out at: {}, {:.0f} seconds".format(now, now-then))

Example of the output:
$ ./timeout.py
Subprocess with idle stdout at timeout: start at 1518081130.44
Timed out at: 1518081135.45, 5 seconds
Generating stdout from subprocess: start at 1518081135.45
Timed out at: 1518081136.47, 1 seconds
As you see, the 1 second timeout is respected in the second case where the child process is generating output.

I think the issue is that the process is not terminated.
If you increase the sleep duration, you would see that the sleep process is not killed by SIGKILL.

As far as I have discovered, the bash process is killed by after the timeout. Presumably the pipe is still open due to the sleep process, so in order to retrieve any output from stdout/stderr, the read waits on the pipe, hence leading to timeout not respected.
We can fix this issue in 2 ways 
(1) kill process tree when timeout happens
(2) force closing the pipes after timeout, but this will leave the sub-processes detached and it will be kept running
I don't know which way is better, hopefully someone with more knowledge can engage in the discussion.

I choose to implement the first way. I believe this is in favour in prevention of resource leaks and zombie processes.
https://github.com/python/cpython/pull/5684 

Work on related issues extends back 9 years to issue 5115. Also see issue 26534.

Issue 37424 fixed this for Python 3.7+ in POSIX. It's still broken in Windows, for which I'm leaving issue 31447 open.