I wanted to find out if the following scenario will be considered a wash sale.
Let's say:
Lot#1: You first buy 500 shares at $4 per share.
Lot#2: A week later you buy 500 shares of the same stock at $3 per share
Lot#3: A week after that you buy 1000 shares of the same stock at $2 per share

I know if I sell the first lot of 500 shares for a loss within a 30 days of buying the Lot#2 or Lot#3, it will be considered a wash sale.

But I am trying to find out, what happens if you sell all of them together. In other words, if I seel all 3 lots together (2000 shares) in one sale, will either Lot#1 or Lot#2 be considered a wash sale.

For this same example sake, let's say if I am trying to sell all shares for $2.50. Since this is loss for Lot#1 and Lot#2, will the loss be considered wash sale?
OR
It won't be considered a wash sale because you are selling them together and the 30 day rule won't apply here?

Thanks in advance!

Definition of WASH SALE :-

wash sale,(Finance.) a fictitious buying and selling of a security, now prohibited by law, as by two brokers at the same time for a single customer, to give an appearance of market activity and encourage outside participation in helping to raise or lower the price.

In your example the buying and selling is NOT fictitious.
You can do what you suggest without breaking any laws.

ROLCAM's definitoin is not the same as what the IRS considers a wash sale. According to the IRS:

A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you:

Buy substantially identical stock or securities,

Acquire substantially identical stock or securities in a fully taxable trade,

Acquire a contract or option to buy substantially identical stock or securities, or

Acquire substantially identical stock for your individual retirement account (IRA) or Roth IRA.

In case of a wash sale you cannot deduct your losses until you sell the substantialy identical lot - in other words, you postone the recognition of the loss until that sale. In your example if you sell all the stock, then you are NOT subject to wash sales rules because you no longer have any stock to postpone the loss with.

For details and examples see:
Publication 550 (2008), Investment Income and Expenses (http://www.irs.gov/publications/p550/ch04.html#en_US_publink100010601)