Upon investigating this with all of the items I currently own on my character I have confirmed that not all quest items are experiencing this bug, only most of them.
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Bug Info:

Event items (Unique/Untradable) are unable to be discarded or sold to an NPC.

Confirmed Affected Items:

Moonfire Faire Event:

Solar Summer Trunks
Solar Summer Top
Lunar Summer Trunks
Lunar Summer Top
Red Summer Trunks
Red Summer Top
Green Summer Trunks
Green Summer Top
Blue Summer Trunks
Blue Summer Top

All Saints' Wake Event:

Pumpkin Head
White Pumpkin Head
Ripened Pumpkin Head
Unripened Pumpkin Head
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This is a serious issue because we as players do not have an incredibly large amount of storage even if it's by no means a small amount but as this adds up over time with more and more events the issue will become increasingly problematic. I made the mistake of not noticing untradable in the item stats and bought a set of both the male and female swimsuits in an attempt to give them to a friend who was about to start playing the game. Upon realizing I couldn't do this I found that I also could not drop them. This is causing me to have 10 spots I cannot use in my inventory and also cannot even use the gear that's unable to be dropped. The swimsuits not mentioned and the body pieces from the halloween event are not affected by this bug though which is what makes it obvious it is actually a bug. Please resolve this as soon as possible. Thank you in advance for your time.