Finite State Machine (FSM) based approaches are widely used for deriving tests with guaranteed fault coverage for discrete event systems and as the behavior of many nowadays information and control systems depends on time, classical FSMs are extended by clock variables. Moreover, optionality in the real system’s specifications motivates the studying test derivation against models with the nondeterministic behavior. In this paper, we adapt classical FSM based test derivation methods for nondeterministic FSMs with timed guards and timeouts (TFSMs). We show that unlike classical FSM conformance relation, the check cannot be reduced to checking the correspondence between TFSMs transitions and this violates the main principle of FSM based test derivation methods. Respectively, a proposed approach and the appropriate fault model are based on the FSM abstraction of the given TFSM specification that is used to adequately describe the behavior of a TFSM. The fault domain contains TFSMs with the known upper boundary on the number of FSM abstraction states and allows to avoid explicit enumeration of implementations under test. We study properties of the FSM abstraction for a nondeterministic TFSM and justify that the use of an FSM abstraction allows to adapt classical FSM based test derivation methods when deriving tests with guaranteed fault coverage for TFSMs. A method is proposed for deriving a complete test suite for a complete possibly nondeterministic TFSM when an implementation under test is a deterministic complete TFSM.