Since {S1} has already deprecated the asset for 10 years, is it treated as a new asset and depreciated for 27.5yrs
Exactly. 2020 will be the first year of the next 27.5 years of depreciation.
Alternatively, is it an option to just leave the same depreciation for {S1}
No. It is not an option. By reducing the cost basis by the depreciation you have already taken you are "in fact" recapturing that depreciation. But, you won't pay taxes on that recaptured depreciation until the tax year you sell or otherwise "completely" dispose of your total interest in the property in a fully reportable and taxable transaction.
