Question...

[Cooltrainer Josh]

Question: Does an item like Dragon Scale/Deepseascale get used up when you trade the Pokemon holding it to evolve it ?

[PhazonElite]

Yes, I believe it does.

[shineyaltaria]

Yep, it will be gone in all cases where the item works on that specific pokemon. If you want to have the item 'survive' a trade then just give it to a pokemon that it does not effect.