What is one way that Washington Irving transforms a German folktale into an American story?

He talks about the death of the English king.

He sets the story before and after the American Revolution.

He refers to the Dutch explorer Hendrick Hudson.

He describes Rip Van Winkle's dream state.

I think the answer to the above question is He sets the story before and after the American Revolution.

Washington Irving used German folktales adapted for the American market. He would often use German folktales as a basis, and then change the setting and the people to be American. An example of this would be Rip Wan Winkle.