IS wants $1 million for beheaded hostage James Foley's remains

Islamic State militants are reportedly trying to sell the remains of beheaded journalist James Foley to his parents or the US government for $1 million.

A source who claims they were contacted by IS, formerly known as ISIL, to broker the deal told BuzzFeed that the group is trying to pass the gesture off as an act of mercy for Foley's devastated family.

In August, a graphic video recording emerged online of Foley being beheaded by an IS militant.

He had been abducted almost two years earlier in November 2012 while working as a freelance war correspondent.

The Islamic fundamentalist group, which claims to control large swathes of Syria and Iraq, is believed to have been financing its operations through the sale of oil in its captured areas and by collecting ransom from the governments of its non-American hostages.

Foley was the first of five Western hostages murdered by IS militants.

Fellow US journalist Steven Sotloff, American aid worker Peter Kassig and British aid workers Alan Henning and David Haines were all beheaded.