In Munchkin you can sell items which amount to not less than 1000 gold pieces or multiples, in exchange for levels.
Am I right that selling is a form of discarding, that is you are "selling" to the "discard pile" of the Treasure deck?
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Sign up to join this communitySelling is a form of discarding, as emphasized by the World of Munchkin FAQ (part of the "The rules say that cards in play must be traded or discarded. When can I discard them?" question). Sold items would go to the respective discard pile.
For completeness' sake, the rules have the following to say about selling items in general, also mentioning that selling items is discarding them:
Selling Items for Levels:
At any point during your turn except during combat or Running Away, you may discard Items worth a total of at least 1,000 Gold Pieces and immediately go up one level. ("No Value" cards are the same as zero Gold Pieces.) If you discard (for instance) 1,100 Gold Pieces worth, you don't get change. But if you can manage 2,000 worth, you can go up two levels at once, and so on. You may sell Items from your hand as well as those you are carrying. You may not sell Items to go to Level 10.