name= @e type=Item

Works as intended
With this command, you're testing for an entity named Test.
-However, the entity isn't called test — just the item that's stored inside of it.-

But isn't the name of an item the same as a name of an entity?

This works:

/testfor @e[type=Item] {Item:{tag:{display:{Name:Test}}}}

Confirmed 14w08a

FOUND A SOLUTION: Click