I'm sorry, but Terlor's answer is incorrect. Note that I am counting the Generations of the first evolution.
Which generation has the most Pokemon which evolve by trading while holding an Item?
Gen 1: 9 (0 when counting the second evolution)
Poliwhirl -> Politoed (King's Rock)
Slowpoke -> Slowking (King's Rock)
Onix -> Steelix (Metal Coat)
Rhydon -> Rhyperior (Protector)
Seadra -> Kingdra (Dragon Scale)
Scyther -> Scizor (Metal Coat)
Electabuzz -> Electivire (Electrizer)
Magmar -> Magmortar (Magmarizer)
Porygon -> Porygon2 (Up-Grade)
Gen 2: 1 (6 when counting the second evolution)
Porygon2 -> Porygon-Z (Dubious Disc)
Gen 3: 4 (3 when counting the second evolution)
Feebas -> Milotic (Prism Scale)
Dusclops -> Dusknoir (Reaper Cloth)
Clamperl -> Huntail (Deepseatooth)
Clamperl -> Gorebyss (Deepseascale)
Gen 4: 0 (5 when counting the second evolution)
Gen 5: 0
Gen 6: 2
Spritzee -> Aromatisse (Sachet)
Swirlix -> Slurpuff (Whipped Dream)
So your answer would be Generation 1 if you count the traded Pokemon, and Generation 2 if you count the newly evolved Pokemon (the result).
